Arun Jaitley did not change income tax slabs in the Union Budget but introduced a number of changes that may affect the taxpayers.
Here are some announcements that may affect you.
Cess on tax
The government has proposed to increase cess on personal income tax and corporation tax to 4 percent from 3 percent. This will increase the tax liability of taxpayers.
The finance minister also introduced a Rs 40,000 standard deduction for salaried employees and pensioners on income in transport and medical expenses.
There is a reduction in the contribution of female employees to the Employment Provident Fund. Now, women joining the workforce for the first time will have to contribute only eight percent for the first three years which results in an increase in take-home pay.
A new tax of 10 percent has also been announced -- long-term capital gains (LTCG) tax, which is applicable on long-term gains from investing in stock markets and equity mutual funds. Under this tax, gains of more than Rs 1 lakh from stock and equity mutual fund investments held over one year will be taxed at 10 percent. All profits up to January 21, 2018, will not be taxed under LTCG.
Jaitley has also increased the limit of deduction under section 80D for senior citizens from present Rs 30,000 to Rs 50,000.
A dividend distribution tax (DDT) has also been introduced for equity mutual funds in the budget. Under this, 10 percent tax will be charged on distributed income by equity-oriented mutual funds. At present, there is no dividend distribution tax on equity oriented mutual funds schemes.
Tax on deposits
For the senior citizen, there are measures to reduce the tax burden on their income. The tax exemption of interest on deposits with banks and post offices has been increased from Rs 10,000 to Rs 50,000.