Finance Minister Shri Arun Jaitley presented the Union Budget 2018 in Parliament, the fifth and last full Budget from the current Government.
Here we bring you some of the key observations from the Finance Bill 2018, though there are no major changes observed in the Direct Taxes arena.
- Income Tax slab rates have remained unchanged for all classes of individuals.
- In case of a Domestic company, where its total turnover or the gross receipts during the Financial Year 2016-17 does not exceed 250 crores, the tax rate applicable will be 25%.
- The standard deduction of Rs. 40000 is proposed for salaried employees but at the same time benefit of transport allowance of Rs. 19200 and medical reimbursement of Rs. 15000 are to be withdrawn. Thus net benefit turns out to be only Rs. 5800.
- A new section 80TTB has been inserted. As per this section where the gross total income of a senior citizen includes income by way of interest on deposits maintained with a banking company, co-operative society, post office, then while computing the total income of the assessee, a deduction up to a maximum of Rs. 50000 shall be allowed. If the interest is above Rs. 50000.00 the excess shall be taxable. Senior Citizen here means a resident in India who is above the age of 60 years or more. The effective date of this amendment is 1st April 2019.
- Insertion of new section 112A under capital gain. As per this section, the long-term capital gain arising on transfer of equity shares of a company, units of equity oriented fund, and units of the business trust shall be calculated @10% if such capital gain exceeds Rs. 100000. Kindly note that the benefit of indexation will not be allowed in this case. Cost of acquisition of such assets if acquired before 1st February 2018, shall be taken to be higher off.
- the actual cost of acquisition of the asset and
- the lower of-
- The fair market value of such asset and.
- The full value of the consideration received.
Tax deduction @10% is required to be made in such a case.
- In case of a charitable trust, the expenditure above Rs. 10000 if made in cash, will be added back while computing the total income. The effective date of this amendment is 1st April 2019
- In PGBP, under section 36, a new clause has to be added, marked to market loss or other expected loss as computed in accordance with the income computation and disclosure standards.
- A new section 43AA has been inserted to tax the foreign exchange fluctuation. Any gain or loss, arising on account of foreign exchange fluctuation will be regarded as gain or loss. This shall be deemed to have taken effect from 1st April 2017.
- Education Cess and Secondary & Higher Education Cess shall be discontinued. A new cess by the name of “Health & Education Cess” shall be levied @ 4% of income tax including surcharge wherever applicable.
- Section 44AE: w.e.f 1st April 2019, the profits and gains from each goods carriage shall be as follows:
- Being a heavy goods vehicle, an amount equal to 1000 per ton of gross vehicle weight for every month or part of a month during which the heavy goods vehicle is owned by the assessee in the previous year or the actual amount declared by the assessee, whichever is higher.
- Other than heavy goods vehicle, Rs. 7500.00 per month or part of the month during which the goods carriage is owned by the assessee in the previous year or an amount actually declared by the assessee, whichever is higher.
- Section 80DDB : w.e.f 1st April 2019, the limit of Rs. 60000 should be replaced by Rs. 100000 for senior citizens as well as super senior citizens.
- Section 194A: The limit of Rs. 10000 is increased to Rs. 50000 for Interest received by a senior citizen from banks, post office deposits.
- Section 115 AD: w.e.f 1st April 2019, the income arising from the transfer of long-term capital asset referred to in section 112A shall be taxed @10% on income exceeding Rs. 100000.
- Section 115JB: A new clause has to be added:
- the aggregate amount of unabsorbed depreciation and loss brought forward in case of a company against whom an application for corporate insolvency resolution process has been admitted by the Adjudicating Authority under the Insolvency and Bankruptcy Code 2016.
- Section 115JC: w.e.f 1st April 2019, for income derived by IFSC(International Financial Services Centre) which derives its income solely in convertible foreign exchange, the applicable rate will be 9% instead of 18.5%.
- Section 54EC: Now this exemption has been restricted to LTCG on immovable property being land and building. LTCG has to be invested in long-term bonds of NHAI, REC within 6 months from the date of transfer. Further, the holding period of the bond has been increased to 5 years from the current 3 years.
- Government will contribute 12% of the wages of new employees in EPF in all sectors for next 3 years
- Women contribution to EPF reduced to 8% from 12% for first 3 years of employment.
- There is a levy of social welfare surcharge on imported goods @10% of (BCD+IGST).Education cess on imported goods has been abolished.
- Customs duty has been increased on certain articles like perfumes, mobile phones, toothpaste, hair gel to name a few.
- AADHAAR FOR CORPORATES – Government will evolve a scheme to assign a Unique ID for companies
- Emoluments for President set at Rs 5 lakh, Rs 4 lakh for Vice President, Rs 3.5 lakh for governors