Penalty on late filing of ITR and other tax changes effective from Apr 1
Penalty on belated ITR, tax on LTCG from shares and equity-oriented mutual funds, here are the tax changes effective from April 1.
Here's a list of all the tax changes that have come into effect from April 1, 2018.
- Penalty on late filing of ITR
As per the new law, a penalty of Rs 5,000 will be levied if the return is filed after the due date but before December 31 of that year and Rs 10,000 post December 31. However, as relief to small taxpayers, if your income is not more than Rs 5 lakh, the maximum penalty levied will be Rs 1,000.
Finance Ministry has extended the deadline to file ITR by a month from July 31, 2018 to August 31, 2018. Therefore, if you file your ITR post August 31, deadline, you will be liable to pay penalty.
Also Read: No penalty on late filing of ITR if your income is below this much
- Reduction in the time limit to revise your ITR
Earlier a taxpayer was allowed to revise his returns up till two years from the end of the financial year for which the return was filed. However, from now on, he will be allowed to revise his return only up till one year from the end of the financial year.
Therefore, for the financial year ending on 31 March, 2018, a person will have time till 31 March, 2019 to revise his ITR. The normal deadline for filing return for FY17-18 would be July 31, 2018.
- Medical reimbursement and transport allowance to become taxable
Until and including FY 2017-18, income tax laws allowed transport allowance up to Rs 19,200 and medical reimbursement up to Rs 15,000 in a year to be claimed exempt from tax. Medical reimbursement was tax-exempt only if the actual bills were submitted to the employer but transport allowance did not require submission of bills.
However, in lieu of the above allowances, standard deduction of Rs 40,000 from salary and pension will be available. You can claim this deduction next year for FY 2018-19 (assessment year 2019-20) at the time of filing ITR.
Also Read: Will private sector pensioners get standard deduction benefit?
- Hike in cess levied on tax liability
You will feel this impact when TDS is deducted from your salary and at the time of paying your income tax liability.
- Levy of LTCG tax on shares and equity-oriented mutual funds
Click here to use our LTCG calculator
- DDT introduced for equity mutual funds
- Senior citizens to get more benefits
However, if you are claiming tax benefit under section 80TTB, you cannot avail it under section 80TTA. Under section 80TTA, interest earned from savings account (bank/post office) up to Rs 10,000 is exempt from tax.
Additional benefits are also available on premium paid for medical insurance. Health insurance premium paid for senior citizens will be allowed a maximum tax-break of Rs 50,000 under section 80D.
Senior citizens who do not have health insurance can also avail this benefit for medical expenses incurred. It is advisable to keep the prescription and medical bills handy in case the tax department might require it in the future.
Tax benefit under section 80DDB has also been increased to Rs 1 lakh for treatment of specified diseases such as chronic kidney diseases (CKD), cancers etc.
- Changes in section 54EC
- Tax-free withdrawal for NPS account holders