By IE&M Research
April 1 is a very important day as several Budget proposals, including the reintroduction of tax on long term capital gains (LTCG) exceeding ` one lakh from sale of shares, will kick in from that day. The 2018-19 Budget, had after a gap of 14 years, reintroduced this tax. Currently, 15% tax is levied on capital gains made on share sale within a year of purchase. However, it is nil for shares sold after a year of purchase. However, indexation benefit for computing tax liability on sale of shares listed after January 31 will be available. In July 2004, the government had abolished LTCG tax on shares and replaced it with the securities transaction tax (STT) – a same-day tax credit system.
Besides, other tax proposals like reduced corporate tax of 25% on businesses on a turnover of up to `250 crore and a standard deduction of `40,000 in lieu of transport allowance and medical reimbursement, will come into effect from this day. With regard to corporate tax, the Budget has lowered the rate to 25% for companies with a turnover of up to `250 crore in 2016-17. The changes will benefit the entire class of micro, small and medium enterprises which accounts for almost 99% of companies filing their tax returns. In the 2015 Budget, Jaitley had promised to reduce the corporate tax from current 30 per cent to 25 per cent over four years.
While the exemption limit on income from interest for senior citizens has been raised five times to `50,000 per year, that for health insurance premium and medical expenditure has been raised to `50,000 from `30,000, respectively under section 80D of the I-T Act. For senior and very senior citizens, tax deduction for critical illness will be `1 lakh from April 1 against the existing limit of `60,000 for senior citizens and `80,000 for very senior citizens.