Tax changes in 2018 that have affected your personal finances

 

Here are some of the important tax changes directly impacting your personal finances that came into effect this year and the dates when they became effective.

As new assessment year 2019-20 started, a quick run-down of the main tax changes implemented during the year would help us in our tax planning and saving efforts. Most tax changes are usually proposed in the Budget (presented in February) and they usually come into effect from the start of the financial year, i.e., April 1 or as mentioned in the Budget documents.

Here are some of the important tax changes directly impacting your personal finances that came into effect this year and the dates when they became effective.


Penalty on late filing of ITR

Though announced in the Budget presented in 2017, a fee levied on the belated filing of INCOME TAX return (ITR) came into effect from April 1, 2018, and was applicable for returns filed in 2018 for FY2017-18 onwards.

The Income Tax Act was amended by inserting a new section 234F. According to this section, an assessee would be liable to pay a maximum late filing fee of Rs 10,000 if his/her ITR is filed after the expiry of the due date. However, as a relief to small taxpayers (whose income does not exceed Rs 5 lakh in a financial year) the late filing fee for them was pegged at Rs 1,000.

Hike in cess liability

The cess levied on tax payments made by you has been hiked by 1 per cent, from 3 percent to 4 percent. This hike has come into effect from April1, 2018. In addition to that, it has been renamed as 'Education and Health Cess.'


Standard deduction replaces medical reimbursement and transport allowance

Another major tax change that was announced in the Budget this year is the introduction of the standard deduction in lieu of medical reimbursement and transport allowance. The latter two components can be easily seen in our salary slips in the previous FY.

However, starting from FY 2018-19, they will no longer be mentioned in the salary slips because of changes in tax laws. The standard deduction of Rs 40,000 introduced in lieu of these two items can be claimed by taxpayers from their salary income at the time of filing ITR.




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