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Here is a look at some of the most pertinent changes in the budget. 
They come into effect from April 1, 2018, once the Finance Bill is passed by the Parliament.

1)Reintroduction of standard deduction
In a relief to the salaried class, the FM has reintroduced standard deduction of Rs 40,000from salary income. Apart from salaried class, even pensioners will be allowed to avail the benefit of this deduction. To avail this tax benefit one would not be required to submit any proofs or bills, it can be claimed straightaway.
This will help salaried employees get some parity with respect to businessmen and other self-employed professionals, who can claim a number of expenses such as rent, staff expenses and driver's salary etc. as business expenditure and reduce tax burden

2)Transport allowance and medical reimbursements to become taxable
While standard deduction has been reintroduced, the tax benefit available on transport allowance and medical reimbursements has been taken away. Currently, transport allowance of Rs 19,200 and medical reimbursement of Rs 15,000 per annum is exempted from tax. These two allowances will become a taxable part of your salary.
Therefore, reintroduction of standard deduction will only provide a marginal relief to salaried employees as against the introduction of Rs 40,000 deduction two deductions worth Rs34,200 are being taken away

3)Cess hiked to 4 per cent
Cess levied on your tax liability has been hiked by 1 per cent from the current 3 per cent to 4 per cent. This cess will be called "Health and Education Cess.".

4)Introduction of tax on long-term capital gains (LTCG) on equity and equity oriented mutual funds
Starting from April 1, tax will be levied on LTCG arising from the sale of equity and equity oriented mutual funds. Earlier, these gains were exempt from tax. It will be charged at arate of 10 per cent plus cess at 4 per cent. However, to provide relief to small investors, LTCG up to Rs 1 lakh will be exempt from tax per fiscal. In the latest budget, there’s a grand-fathering clause attached to the new section 112A on long-term capital gains. It seeks to shield investors who have bought listed shares or equity mutual funds before February 1 2018, from the impact of the 10 per cent tax. The section says that if a taxpayer has acquired listed shares or equity funds before February 1, The extent of gains (or losses) will be calculated based on two things: your cost of acquisition and the highest traded price for the stock (or closing Net Asset Value of the fund) as of January 31, 2018. The higher of the two will be the acquisition cost so that effectively there Is no tax on the gains made till Feb 1, 2018

5)Increase in tax exempt limit of interest income for senior citizens
Income earned from interest on bank savings deposits, fixed/recurring deposit schemes and deposits in post office will be exempted from income tax up to Rs. 50,000. This is a significant increase in the limit, as the current exemption limit stands at Rs. 10,000 under Section 80TTA. The proposed insertion of Section 80TTB will create a tax section exclusively for the benefit of senior citizens only, who will not be governed by Section 80TTA anymore

6)Raising the threshold limit for the TDS for senior citizens
Along with the raising the limit of taxexempted interest income for senior citizens, an amendment has been proposed in the tax deducted at source (TDS) TDS law. As per the proposed change, no TDS will be deducted from interest incomes up to Rs 50,000 a year for senior citizens.

7)Hike in the deduction limit on medical expenditure
It had been proposed to raise the limit of deduction under section 80D and section 80DDB for senior citizens. Under section 80D, the limit has been proposed to be hiked from Rs30,000 to Rs 50,000. The current exemption limit for this is at Rs. 30,000. The FM’s proposal is to increase the limit to Rs. 50,000. Also, this benefit will also extend to the assesse who is paying the premium on behalf of their parents. The government has proposed to increase the exemption limit for medical expenses incurred due to critical illnesses like cancer, motor neuron disease, AIDS etc. for all senior citizens, to Rs. 1 lakh. This is proposed to substitute the two different limits for senior citizens (60 years) and super senior citizens (80 years and above) of Rs. 60,000 and Rs. 80,000 respectively, currently provided for under the section

8)Dividend distribution tax on equity mutual funds
Tax at the rate of 10 per cent will be levied on the dividends distributed in case of equity mutual funds. However, this dividend will remain tax-free in the hands of investors. The tax will be deducted by the fund houses before distribution of dividend. This will impact investors who were relying on dividends from balanced funds as a source of regular income.

9)Extension of Pradhan Mantri Vaya Vandana Yojana
The FM has also proposed to increase the annuity-cum-insurance plan ‘Vaya Vandana Yojana’ by two year still March 31, 2020. Along with the extension of scheme, the maximum investment limit has also been proposed to increase to Rs 15 lakh – double the current limit.

10)Taxexemption on NPS corpus for self employed
For self-employed people, it has been proposed to exempt 40 per cent of the total amount payable from tax upon closure of National Pension System (NPS). This tax benefit will now bring self-employed individuals at par with the salaried class.

(Shubham is a Chartered Accountant and MBA (Finance). She is on the forum of “Economic Times” experts on Taxation.   She specialises in Individual Taxation and Taxation of Freelancers & Small businesses. She can be reached on for answering your tax related questions.)
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