Salaried taxpayers will have Rs 40,000 subtracted from their income before calculating taxable income. The real gain will, however, be only Rs 5,800 a year because transport allowance of Rs 19,200 and medical expenses worth Rs 15,000 are no more tax-free. Effectively, standard deduction has only gone from Rs 34,200 to Rs 40,000 and depending on your tax slab (5 per cent, 20 per cent or 30 per cent), your post-tax gain will be much less than Rs 5,800.

Higher cess

Even a small benefit from standard deduction will be eaten up for many taxpayers by the increase in health and education cess from 3 per cent to 4 per cent. For certain category of taxpayers, tax liability will increase after adjusting for standard deduction and cess. With no bills to claim allowances, paperwork will come down uniformly.

Lower tax on seniors

In 2018-19 senior citizens’ interest income of up to Rs 50,000 will be exempt from tax. So far, the exemption limit was Rs 10,000 a year. Together with standard deduction, post-retirement life has become less taxing.
Long-term capital gains (LTCG) tax

Unlike other tax changes that will show up only when you file tax return in 2018-19, the impact of long-term capital gains tax, which returns after 14 years, will be felt immediately. For calculation of gains, price of a stock on January 31, 2018, will be taken as the base. Gains of up to Rs 1 lakh will not be taxed for retail investors.

Companies with up to Rs 250 crore annual turnover will now pay corporate tax of 25 per cent, and not 30 per cent they paid until last financial year. The lower rate was so far applicable only to companies with up to Rs 50 crore annual sales.

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Also coming into effect from April 1 is the much deferred and long desired e-way bill system to track movement of goods across the country. It’s a measure to bring down evasion of GST which is one big reason behind lower than expected GST revenues. A higher GST collection is intrinsically linked to lower rate of tax.