Budget FY 2018-19 – Tax on Salary

Budget FY 2018-19 – Tax on Salary

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The Union Finances for FY 2018-19 was tabled within the Parliament by the Finance Minister of India on 01-Feb-2018. Listed here are the important thing proposals associated to computation of tax on wage which payroll managers want to think about for FY 2018-19.

1. Tax slabs stay the identical

The tax charges for salaried staff under 60 years of age for FY 2018-19 shall be the identical as these for FY 2017-18.

The tax charges (for FY 2018-19) for salaried staff under 60 years of age are as follows.

Complete Revenue for the Yr in Rs Tax Price in %
As much as 2,50,000 Nil
2,50,001 to five,00,000 5
5,00,001 to 10,00,000 20
Above 10,00,000 30

The tax charges (for FY 2018-19) for salaried staff aged 60 years and above however under 80 years are as follows.

Complete Revenue for the Yr in Rs Tax Fee in %
As much as three,00,000 Nil
three,00,001 to five,00,000 5
5,00,001 to 10,00,000 20
Above 10,00,000 30

2. Surcharge stays the identical

In case the full taxable revenue for the yr goes past Rs 50 lakh (however is lower than or equal to Rs 1 crore) within the yr, a surcharge of 10% (topic to marginal relief) on the revenue tax is to be deducted, because it was in FY 2017-18.

In case the full taxable revenue for the yr goes past Rs 1 crore within the yr, a surcharge of 15% (topic to marginal relief) on the revenue tax is to be deducted – the surcharge was 15% in FY 2017-18 too.

three. Introduction of Well being and Schooling Cess

In FY 2017-18, the Schooling cess was levied at 2% on the revenue tax and surcharge, if relevant, and the Larger Schooling cess was levied at 1% on the revenue tax and surcharge, if relevant. In FY 2018-19, a “Well being and Schooling Cess” shall be levied at four% on revenue tax and surcharge, if relevant, in lieu of the Schooling Cess and the Greater Schooling Cess.

four. Reintroduction of Commonplace Deduction for salaried staff

An ordinary deduction of Rs. 40,000 shall be utilized as a deduction on wage, for the aim of calculating taxable wage in FY 2018-19. You might remember that normal deduction was abolished some years in the past. It has now been reintroduced.

5. No tax profit on reimbursement of medical bills

In line with Part 17 of the Revenue Tax Act, any sum paid by the employer in respect of any expenditure truly incurred by the worker on his medical remedy or remedy of any member of his household is exempted from revenue tax so long as such sum doesn't exceed fifteen thousand rupees. This clause has now been omitted and from FY 2018-19, any reimbursement of medical bills by the employer shall be absolutely taxable within the palms of the worker.

6. No tax profit on transport allowance, apart from in a different way abled staff

In accordance with Rule 2BB of the Revenue Tax Act, any transport allowance paid to an worker (who isn't a disabled worker) to satisfy his expenditure for the aim of commuting between the place of his residence and the place of his obligation is exempted from revenue tax to a most of Rs 1,600 per thirty days. This rule has now been omitted and the exemption won't obtainable from FY 2018-19.

Nevertheless, in case of disabled staff (please see the revenue tax guidelines for the precise definition of disabled for figuring out eligibility for this profit), transport allowance will proceed to stay exempted to the extent of a most of Rs three,200 per thirty days.

7. Change to medical insurance coverage tax profit for senior residents

Part 80D permits a deduction of as much as Rs 30,000, for senior residents, in respect of funds in the direction of annual premium on medical insurance coverage, or preventive well being check-up, of a senior citizen. From FY 2018-19 onwards, the deduction restrict has been enhanced to Rs 50,000. Please word that the enhancement in deduction is just for senior residents and really senior residents.

eight. Enhanced deduction for bills incurred for remedy of specified illnesses for senior residents

Part 80DDB permits a deduction of as much as Rs 60,000, for senior residents, for remedy of specified illnesses. From FY 2018-19 onwards, the deduction restrict has been enhanced to Rs 100,000. Please notice that the enhancement in deduction is just for senior residents.

9. Deduction in respect of curiosity revenue to senior citizen

At present, a deduction as much as Rs 10,000 is allowed beneath part 80TTA to an worker in respect of curiosity revenue from financial savings account. The price range has proposed creation of a brand new part 80TTB which might permit a deduction of as much as Rs 50,000 in respect of curiosity revenue from deposits held by senior residents. If an worker is a senior citizen, please calculate deduction beneath part 80TTB as an alternative of part 80TTA from FY 2018-19 onwards.

10. No deduction profit if tax return is just not filed by the due date

The finance invoice proposes the introduction of a brand new clause underneath Part 80AC of the Revenue Tax Act.

80AC. The place in computing the entire revenue of an assessee of any earlier yr related to the evaluation yr commencing on or after––

(i) the first day of April, 2006 however earlier than the first day of April, 2018, any deduction is admissible underneath part 80-IA or part 80-IAB or part 80-IB or part 80-IC or part 80-ID or part 80-IE;

(ii) the first day of April, 2018, any deduction is admissible beneath any provision of this Chapter beneath the heading “C.—Deductions in respect of sure incomes”,

no such deduction shall be allowed to him until he furnishes a return of his revenue for such evaluation yr on or earlier than the due date specified beneath sub-section (1) of part 139.

The textual content in daring within the above quote is the brand new clause proposed to be launched. The brand new clause proposes to disclaim sure deductions underneath Chapter VIA in case an worker information his tax return past the due date specified by the Revenue Tax Act. Some tax practitioners have opined that this consists of denial of 80C deductions. Nevertheless, it must be famous that heading “C – Deduction in respect of sure incomes” (specified within the new clause) doesn't embrace 80C deductions which come beneath heading “B — Deductions in respect of sure funds” inside Chapter VIA of the Revenue Tax Act.

Because of this staff won't be denied 80C deductions even when they file their return after the due date.

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