Union Budget, 2018 Highlights

Positive Highlights

- For salaried employees, a standard deduction of Rs 40,000 to be allowed in lieu of transport allowance and medical expenses.
Thus, benefits of Transport Allowance to the extent of Rs.19,200/- & Medical Allowance to the extent of Rs.15,000/- (aggregating to Rs.34,200/-) are being withdrawn. Net benefit to the salaried taxpayers Rs.5,800/-

- Corporate tax reduced to 25% for firms with turnover of Rs 250 Crores in FY 2016-17.
This action is said to benefit to the extent of 99% of the Companies existent in India.

- Interest income exemption on deposits with banks and post offices for senior citizens increased from Rs 10,000 to Rs 50,000.

- Senior citizens will be able to claim benefit of deduction up to Rs 50,000 annually on health insurance premium and/or general medical expenditure incurred.

E-assessment of Income Tax Act to eliminate person-to-person contact.

- Govt makes PAN mandatory for any entity entering into a financial transaction of Rs 2.5 lakh or more.

- Provisions of Sec. 43CA, 50 C & 56 (2) (x) are being ameneded to allow 5% of Sale Consideration in variation w.r.t. Stamp Duty Value of the property, on account of location, disadvantage, etc.
This will give relief to the assessees dealing in real estate, as upto 5% downward sale consideration would be accepted without attracting  the provisions of Sec 43CA, 50C & 56 (2) (x) by the Income Tax Department, subject to their satisfaction.

Negative Highlights

- No change in personal income tax slabs and rates.
Check Applicable Slab Rates for FY 2017-18 & FY 2018-19


- Surcharge of 10% on income above Rs 50 lakh but less than Rs 1 cr, 15% on income above Rs 1 cr to continue.


- Govt introduces long-term capital gains on equity market; long-term capital gains over Rs 100,000 to be taxed at 10%.
Cut off date for the same is to be considered as 31/01/2018. Also, this tax is liable for TDS.

Income from Dividends distributed by equity-oriented mutual funds to be taxed @10%.
The tax would be deducted by way of DDT. DDT will reduce the in-hand return to the investor 
and dividend would still be exempt in the hands of the investor.

- Education cess increased to 4% from 3%.
Education Cess would now be know as Education and Health Cess.

- All the companies, irrespective of income, are expected to file income tax returns.
In the cases where such return is not filed, the directors of such companies would be liable for prosecution irrespective of the fact whether it had tax liability of Rs.3000/- or not. 

- Deemed dividend is proposed to be taxed in the hands of the Company itself, as DDT @ 30%.

Customs duty on mobile phones increased from 15% to 20%.
This means your i-Phones would get costlier.

- Customs duty on crude edible vegetable oils hiked from 12.5% to 30%; on refined edible vegetable oil from 20% to 35%

- Customs duty on perfumes, dental hygiene, after-shave, deodorants, room deodorisers, preparations for use on hair doubled to 20%

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