Finance Minister Arun Jaitley, in his Union Budget speech, proposed some of the key income tax changes that will impact many taxpayers.
These changes will come into effect from April 1, once the Finance Bill is passed by parliament.
Here are some of the tax changes proposed by Jaitley:
1. Standard deduction is back: The Finance Minister has re-introduced standard deduction of Rs 40,000 from salary income, both for the salaried class and pensioners. The benefits arising from standard deduction depends on the tax bracket a salaried individual falls in.
2. Long-term capital gains tax: The government also introduced a new 10 percent tax that will be applicable on capital gains above Rs. 1 lakh upon the sale of equity share or units of equity oriented mutual funds. But the gains until January 31, 2018 are being exempted.
3. Higher cess: Cess on income tax has been raised to 4 percent from 3 percent for individual taxpayers on the amount of income tax payable.
4. Transport allowance and medical reimbursements to become taxable: Currently, transport allowance of Rs 19,200 and medical reimbursement of Rs 15,000 per annum is exempted from tax. But once the Finance Bill gets passed, these tax benefits will soon become a thing of the past.