Budget 2018 Highlights

Tax Highlights

• Reduction in corporate tax rate to 25% for companies having a turnover of Rs 250 crores and less
• Deduction under Section 54EC is restricted to the transfer of land/Buildings/ both and the Holding period of the long-term investment asset such as NHAI/ REC Bonds is now increased to five years from the earlier period of three years.
• Equity Oriented Mutual funds to face a Dividend Distribution Tax @ 10%
• Alternate Minimum Tax (AMT) @ 9% to be levied on non-corporate taxpayers operating in IFSC on par with MAT for corporates
• Cryptocurrencies continued to be considered as not “legal tender”. Government to consider exploring the Blockchain technology
• Introduction of e-assessments to reduce interface between income tax department & taxpayers
• Deduction under Section 80-IAC for the eligible business of Start-Ups, is now also available to those that are incorporated on or after the 1st day of April 2019 but before the 1st day of April, 2021 with a condition that the turnover should not exceed Rs 25 Crore for seven previous years commencing from the date of incorporation. Eligible business now also includes “Improvement of products or processes or services or a scalable business model with a high potential for employment generation or wealth creation”

• To control cash economy, payments exceeding Rs 10,000 in cash made by trusts and institutions to be disallowed and would be subject to tax.
• Tax on Long Term Capital Gains exceeding Rs 1 lakh at the rate of 10%, without allowing any indexation benefit. However, all gains up to 31st January, 2018 will be grandfathered.
• Proposal to introduce tax on distributed income by equity oriented mutual funds at the rate of 10%.
• Proposal to increase cess on personal income tax and corporation tax to 4% from present 3%.
• Proposal to roll out E-assessment across the country to almost eliminate person to person contact leading to greater efficiency and transparency in direct tax collection.
• Proposed changes in customs duty to promote creation of more jobs in the country and also to incentivise domestic value addition and ‘Make in India’ in sectors such as food processing, electronics, auto components, footwear and furniture.

Relief to Senior Citizens

• Exemption of interest income on deposits with banks and post offices to be increased from Rs 10,000 to Rs 50,000.
• TDS not required to be deducted under section 194A. Benefit also available for interest from all fixed deposit schemes and recurring deposit schemes.
• Hike in deduction limit for health insurance premium and/or medical expenditure from Rs 30,000 to Rs 50,000 under section 80D.
• Increase in deduction limit for medical expenditure for certain critical illness from Rs 60,000 (in case of senior citizens) and from Rs 80,000 (in case of very senior citizens) to Rs 1 lakh for all senior citizens, under section 80DDB.
• Proposed to extend Pradhan Mantri Vaya Vandana Yojana up to March, 2020.
• Current investment limit proposed to be increased to Rs 15 lakh from the existing limit of Rs 7.5 lakh per senior citizen.