You have just stepped into the new financial year and it is very important for you to plan finances. The Union Budget 2018-19, introduced some changes and it is very important that you understand their implications.
It’s never too late to do tax planning and the benefits are huge. The money you save in taxes can be invested in fixed income or equity, depending on how much risk you can bear. Higher the risk, higher the return.
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Income Tax Slabs For Senior Citizens
The Government is very concerned about the health and education of the poor and rural families in India.
So, the secondary and higher education cess of 3%, has been replaced with a 4% health and education cess.
The salaried citizens of India have some good news. The Government has brought back the “standard deduction” of Rs 40,000 a year.
This deduction replaces the transport allowance of Rs 19,200 a year and the medical reimbursement of Rs 15,000 a year. The transport allowance and medical reimbursement will no longer be available from the tax year of 2018-19.
Standard Deduction replaces the transport allowance and medical reimbursement in the tax year 2018-19.
The interest income a senior citizen gets from bank deposits, post office deposits and co-operative bank deposits, is eligible for a higher deduction of Rs 50,000. The threshold limit for the deduction of tax at source (TDS), on interest income for senior citizens, has also been raised from Rs 10,000 to Rs 50,000.
As per the new provisions of the Union Budget, senior citizens will enjoy a tax deduction of up to Rs 50,000 a year, on the premiums paid for a health insurance plan. The deduction was Rs 30,000 a year, prior to this rule.
Senior citizens will now spend more on health insurance plans.
SEE ALSO: How To Calculate Your Taxable Income?
There has been an increase in the deduction under Section 80DDB of the income tax act, for senior citizens on medical treatment of specified diseases like malignant cancers, chronic renal failure, haematological disorders and so on.
The Deduction was Rs 60,000 a year for senior citizens and Rs 80,000 a year for very senior citizens.
This deduction has been increased to Rs 1 Lakh for both senior and super-senior citizens.
See Also: Income tax return status
You will now have to pay tax at the rate of 10% on long-term capital gains (LTCG), on gains in excess of Rs 1 Lakh, arising from the transfer of equity shares/equity oriented mutual funds, where security transaction tax (STT) has been paid.
You will not be able to enjoy indexation benefits on this gain. A new Section has been inserted, which provides a method to grandfather the long-term capital gains on equity funds earned till January 31st 2018, and sold after March 31st 2018.
Grandfathering clause is an exemption granted to you and other existing investors on equity shares and equity-oriented mutual funds, on profits made till January 31st 2018. Be Wise, Get Rich.
Mr. C S Sudheer is the founder and CEO of IndianMoney.com – India’s largest Financial Education Company. He started his career with ICICI Prudential Life Insurance and later on worked with Howden India. After his brief stint in Howden India, he moved on and incorporated Suvision Holdings Pvt Ltd which is the sole promoter of IndianMoney.com. He aims to build a nation that is financially literate with investment savvy citizens.
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