Budget 2018 for Individuals: No change in income tax, more cess and higher deductions
Finance Minister Arun Jaitley left the income tax rates for 2018-19 unchanged
Much to the dismay of tax paying individuals, Finance Minister Arun Jaitley on Thursday left the income tax rates for 2018-19 unchanged while increasing the cess levies on it by 1 percent.
“The government had made many positive changes in the personal income-tax rate applicable to individuals in the last three years,” Jaitley said in his Budget speech.
“Therefore, I do not propose to make any further change in the structure of the income tax rates for individuals.”
In the Budget 2017-18, Jaitley had reduced the income tax rate to 5 percent from 10 percent under the income slab from Rs 2.5 lakh per annum to Rs 5 lakh per annum.
However, Jaitley proposed to hike the cess on personal income tax by one percent.
“At present, there is a three percent cess on personal income tax and corporation tax consisting of two percent cess for primary education and one percent cess for secondary and higher education. In order to take care of the needs of education and health of BPL and rural families, I have announced programs…,” Jaitley said.
“To fund this, I propose to increase the cess by one percent. The existing three percent education cess will be replaced by a four percent health and education cess to be levied on the tax payable. This will enable us to collect an additional amount of Rs 11,000 crore.”
Related: Union Budget 2018: All major announcements
In addition, Jaitley proposed to “allow a standard deduction of Rs 40,000 in lieu of the present exemption in respect of transport allowance and reimbursement of miscellaneous medical expenses”.
“Apart from reducing paper work and compliance, this will help middle-class employees even more in terms of reduction in their tax liability. This decision to allow standard deduction shall significantly benefit the pensioners also, who normally do not enjoy any allowance on account of transport and medical expenses. The revenue cost of this decision is approximately Rs 8,000 crore,” Jaitley said.
“The total number of salaried employees and pensioners who will benefit from this decision is around 2.5 crore.”
The current tax-free limit for medical expense reimbursement is set at 15,000 per annum and transport allowance exemption of Rs 1,600 per month.
With IANS inputs
