Key Highlights of Union Budget 2018-19

By | February 6, 2018

Find below the major highlights of the Union Budget 2018, relating to tax proposals, presented by the Honorable Finance Minister, Shri Arun Jaitley, in the parliament on 1st February, 2018.

  • 100% deduction to companies registered as Farmer Producer Companies and having annual turnover up to Rs 100 crores in respect of their profit derived from such activities for a period of five years from financial year 2018-19.
  • 80JJA deduction to be extended to footwear and leather industry.
  • Under capital Gains, no adjustment shall be made in a case where the circle rate value does not exceed 5% of the consideration.
  • Reduction of tax rate to 25% for companies who have reported turnover up to Rs 250 crore in the financial year 2016-17.
  • Standard deduction of Rs 40,000/- in lieu of the present exemption in respect of transport allowance and reimbursement of miscellaneous medical expenses. Further, transport allowance at enhanced rate shall continue to be available to differently abled persons. Also other medical reimbursement benefits in case of hospitalization etc., for all employees shall continue.
  • Exemption of Interest Income increased from Rs 10,000 to Rs 50,000 in case of senior citizens. Also, TDS shall not be required to be deducted on such income, under section 194A.
  • Raising the limit of deduction u/s 80D increased from Rs 30,000 to Rs 50,000 in case of senior citizens.
  • Raising the limit of deduction for medical expenditure to Rs 100,000 in respect of all senior citizens under section 80DDB
  • Tax on long term capital gains on listed equity shares exceeding Rs 1 lakh @ 10% without allowing the benefit of any indexation. However, all gains up to 31st January, 2018 will be grandfathered.
  • Introduction of tax on distributed income by equity oriented mutual fund at the rate of 10%.
  • Education Cess (2%) and Secondary and Higher Education Cess (1%) to be replaced by 4% “Health and Education Cess” to be levied on the tax payable.
  • benefit of exemption for withdrawal up to 40% from National Pension System Trust (NPS) to all subscribers and not only to employees.
  • Mandatorily obtaining of PAN to every entity, not being an individual, which enters into any financial transaction of an amount aggregating to Rs.2.50 Lakh or more in a financial year shall be required to apply for a permanent account number (PAN). It is also proposed that directors, partners, principal officers, office bearer or any person competent to act on behalf of such entities shall also apply for PAN.
  • Mandatory filing of return u/s 139(1) in order to avail benefit of any deduction under Chapter VIA-C
  • Investment in capital gain bonds by providing that the exemption shall be available only in respect of long-term capital gains arising out of sale of immoveable property and investment in the bond shall be for a minimum period of 5 year from the existing 3 years.
  • Amendment in section 9 of the Income Tax Act that significant economic presence of a non-resident shall constitute “business connection” with India.
  • Deemed dividend under section 2(22)(e) of the Act shall be subject to dividend distribution tax at the rate of 30% without grossing up.
  • The Government does not consider crypto-currencies legal tender or coin and will take all measures to eliminate use of these crypto-assets in financing illegitimate activities or as part of the payment system.

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