[Blogs] #2 Finance Act 2018-19 and its key highlights

[Nikhil0789]

By Pooja Hegde Tax deductions, tax saving investments, tax saving tips The Finance Act 2018-19 has come up with some groundbreaking concepts that have changed the very facet of taxation in India. However, the only valid criticism would be that the slabs mostly remain unchanged while the inflation continues to rise at a constant pace. To give a clearer view of the prime aspects of the changes, we have listed below some of the key highlights of this Act. Top 10 Key Highlights of this Act

1. Standard Deduction of Rupees 40,000 The concept of Standard Deduction had earlier been struck down by the Finance Act, 2005 but has now returned for good. So job goers can now deduct a sum of Rupees 40,000 per annum from their Total Gross Salary.
2. Certain Allowances cannot be claimed You can no longer claim the tax deductions on Transport and Medical allowances that you claimed earlier. So the Transport Allowance of Rupees 19,200 and Medical Allowance of Rupees 15,000 per annum are done away with. This greatly helps reduce the paperwork involved in claiming these allowances. Plus, the Standard Deduction of Rupees 40,000 is more than these two allowances put together so there is nothing to fret about.
3. Interest up to Rupees 50,000 Tax Free for Senior Citizens Now Senior Citizens can enjoy Tax Free interest up to Rupees 50,000 per annum. This could be from Savings Account, Fixed Account or a combination of the two. Hence, no TDS would be deducted on interest paid to Senior Citizens up to the said amount.
4. Education Cess goes up Earlier known as Education cess and charged at 3 percent is now relabelled as Education and Health cess and is charged at 4 percent per annum.
5. LTCG charged Unlike earlier, income from stocks if held for over a year is no longer tax-free. At least not if it exceeds a sum of Rupees One lakh per annum, as any Long Term capital gain derived from the sale of equities or equity-oriented investments would now be chargeable at 10 percent per annum.
6. Tax Slabs remain the same Except in the case of Domestic Companies, there is no change in the Tax Slab Rates and it continues to be the same as earlier.
7. Lesser Tax Burden for upcoming Enterprises To promote business in India, the Domestic companies need no longer face the severity of paying 30 percent tax if their Total Turnover exceeds Rupees 50 crores. In fact, these companies can continue to pay 25 percent tax unless their Total Turnover exceeds Rupees 250 crores.
8. Mandatory PAN for certain Transactions If any Assessee enters into a financial transaction worth Rupees 2,50,000 or more per annum with any single person or Assessee, then it is mandatory to record the PAN number of that person or Assessee.
9. Deemed Dividend Taxed Any loans or advances given by a non-financial services providing company to its Directors shall now be charged at the hands of the Company at 30 percent. These loans were earlier taxable at the hands of the recipient as Deemed Income.
10. Equity-Oriented Mutual Funds Taxed Now, you need to think twice before making any tax saving investments in equity-oriented Mutual Funds. That’s because the Mutual Fund would be charged at 10 percent and so the returns would drop by a flat 10 percent. Knowledge of the above stated changes in tax deductions is essential to make the right tax saving investments. There are several more tax saving tips that our Support Team can provide you with on a case-to-case basis. To avail our top-grade time based services means to subscribe to our continuous support and tax planning. That ensures you with round the year services from your very own personal Chartered Accountant.