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Income Tax For Individuals Assessment Year 201920
February, 08th 2018

The individuals, especially the salaried people expected much from the Finance Minister in his budget for this year 2018.  But the Finance Minister did not bring the income exemption limit and also the rate structure.   However he introduced some changes that will be beneficial to some extent.   In this budget, the senior citizens and very senior citizens will gain more than the salaried people.

Individuals

Tax rate

In the case of every individual other than senior citizen and very senior citizen or HUF or association of persons or body of individuals, whether incorporated or not, or every artificial judicial person the rates of income tax are as below-

  • Where the total income does not exceed 2,50,000 = NIL
  • Where the total income exceeds 2,50,000 but

does not exceed 5,00,000 = 5% of the amount by which the

               total income exceeds 2,50,000

  • Where the total income exceeds 5 lakh but

does not exceed 10 lakhs= 12,500/- plus 20% of the

                amount by which the total income

                exceeds 5 lakhs

  • Where the total income exceeds 10 lakhs= 1,12,500/- plus 30% of the

   amount by which the total income

   exceeds 10 lakhs.

Standard deduction

Section 16(i) of the Income Tax Act, 1961 deals with the standard deduction allowed to the individuals which has been omitted by Finance Act, 2005 with effect from 01.04.2006.   Now the standard deduction has again been introduced in the present budget.  Clause 7 of the Finance Bill, 2018 proposes to insert a new sub-section (ia) allowing a deduction of 40,000/- or the amount of salary, whichever is less.

But at the same time the Finance Ministry took away the exemption granted to Transport allowance and also the medical reimbursement exemption up to 15,000/- per year.  In total the benefit accrues the salaried people is very meager.

Senior citizen

Tax rate

In the case of every individual, being a resident in India, who is of the age of 60 years or more but less than 80 years at any time during the previous year, the rates of income tax are as below-

  • Where the total income does not exceed 3,00,000 = NIL
  • Where the total income exceeds 3,00,000 but

does not exceed 5,00,000 = 5% of the amount by which the

               total income exceeds 3 lakhs

  • Where the total income exceeds 5 lakh but

does not exceed 10 lakhs= 10,000/- plus 20% of the

                amount by which the total income

                exceeds 5 lakhs

  • Where the total income exceeds 10 lakhs= 1,10,000/- plus 30% of the

   amount by which the total income

   exceeds 10 lakhs.

Deduction in health insurance premium and medical treatment

Section 80D provides for a deduction of up to 30,000/- shall be allowed to an assessee in respect of payments towards annual premium on health insurance policy or preventive health check up of a senior citizen.   It is proposed to amend Section 80D so as to raise the monetary limit of deduction from 30,000/- to 50,000/-

Deduction for medical treatment of specified diseases

Section 80DDB provides for a deduction  to an individual to amount paid to medical treatment for specified diseases in respect of senior citizens up to 60,000/- subject to specified conditions.    It is proposed to amend the provisions of section 80DDB so as to raise the monetary limit of deduction to 1,00,000/- for senior citizens.

Deduction in respect of interest income

Section 80TTA provides for a deduction of 10,000/- in respect of interest income from saving account.   It is proposed to insert a new section 80TTB so as to allow a deduction up to 50,000/- in respect of interest income from deposits held by senior citizens.  No deduction under section 80TTA shall be allowed in these cases.  In line with this amendment it is also proposed to amend section 194A so as to raise the threshold for deduction of tax at source on interest income for senior citizens from 10,000/- to 50,000/-.

Standard deduction

Senior citizens are eligible for standard deduction of 40,000/- under section 16(i) of the Income Tax Act, 1961.

Very Senior citizen

Tax rate

In the case of every individual, being a resident in India, who is of the age of 80 years or more at any time during the previous year, the rates of income tax are as below-

  • Where the total income does not exceed 5,00,000 = NIL
  • Where the total income exceeds 5 lakhs but

does not exceed 10 lakhs=  20% of the    amount by which the

    total income    exceeds 5 lakhs

  • Where the total income exceeds 10 lakhs= 1,00,000/- plus 30% of the

   amount by which the total income

   exceeds 10 lakhs.

Deduction in health insurance premium and medical treatment

Section 80D provides for a deduction of up to 30,000/- shall be allowed to an assessee in respect of payments towards annual premium on health insurance policy or preventive health check up of a senior citizen.   It is proposed to amend Section 80D so as to raise the monetary limit of deduction from 30,000/- to 50,000/-

Deduction for medical treatment of specified diseases

Section 80DDB provides for a deduction to an individual to amount paid to medical treatment for specified diseases in respect of senior citizens up to 60,000/- subject to specified conditions.    It is proposed to amend the provisions of section 80DDB so as to raise the monetary limit of deduction to 1,00,000/- for senior citizens.

Deduction in respect of interest income

Section 80TTA provides for a deduction of 10,000/- in respect of interest income from saving account.   It is proposed to insert a new section 80TTB so as to allow a deduction up to 50,000/- in respect of interest income from deposits held by senior citizens.  No deduction under section 80TTA shall be allowed in these cases.  In line with this amendment it is also proposed to amend section 194A so as to raise the threshold for deduction of tax at source on interest income for senior citzens from 10,000/- to 50,000/-.

Standard deduction

Senior citizens are eligible for standard deduction of 40,000/- under section 16(i) of the Income Tax Act, 1961.

Surcharge on income tax

The surcharge on income tax is increased in the present finance bill.  The following is the surcharge rate-

  • Total income exceeding 50 lakhs but not exceeding 1 crore – surcharge 10% on income tax; and
  • Total income exceeding 1 crore – surcharge 15% of such income tax.

Provided that in case of total income exceeding 50 lakhs but not exceeding 1 crore, the amount payable as income tax and surcharge on such income shall not exceed the total amount payable as income tax on a total income of 50 lakh by more than the amount of income that exceeds 50 lakhs.

In case of total income exceeds 1crore, the total amount payable as income tax and surcharge on such income shall not exceed the total amount payable as income tax and surcharge on a total income of 1 crore by more than the amount of income that exceeds 1 crore.

Health and Education Cess

3% Education Cess to be replaced with Health and Education  cess @ 4% for all taxpayers will be levied on the income tax.

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