Income Tax: This is How Today’s Union Budget Will Impact Your Bank Account
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New Delhi: Personal income tax is going to be the major look out as Finance Minister Arun Jaitley presents the Union Budget 2018 on Thursday.
Jaitley in his last Budget reduced rate of income tax to 5% from an erstwhile rate of 10% in the income slab of 2.5 lakh per annum to 5 lakh per annum. The FM also provided an annual tax rebate of Rs 12,500 for individuals in the income slab of Rs 5 lakh per annum to 10 lakh per annum.
Every individual whose total income exceeds tax exemption limit has to pay income tax based on prevailing rates applicable from time to time.
The income tax exemption limit till last year was 2.5 lakh per annum.
Capital Gain Tax
Profits or gains that arises from the sale of a ‘capital asset’ is termed as capital gain. This gain or profit is charged to tax in the year in which the transfer of the capital asset takes place.
Capital gains are not applicable when an asset is inherited because there is no sale, only a transfer. However, if this asset is sold by the person who inherits it, capital gains tax will be applicable. The Income Tax Act has specifically exempted assets received as gifts by way of an inheritance or will.
Capital assets include land, building, house property, vehicles, patents, trademarks, leasehold rights, machinery, and jewellery.
Short-term capital asset is held for not more than 36 months or less is a short-term capital asset.
Long-term capital asset is held for more than 36 months is a long-term capital asset.
From FY 2017-18 onwards the contention of 36 months has been reduced to 24 months in the case of immovable property being land, building, and house property.
Long-term capital gain is taxable at 20 percent + surcharge and education cess.
If securities transaction tax is not applicable, the short-term capital gain is added to your income tax return and the taxpayer is taxed according to his income tax slab.
Securities Transaction Tax (STT)
A lot of people do not declare their profit and avoid paying capital gain tax, as government can only tax those profits, which have been declared by people. To battle this situation the Centre has introduced STT which is applicable on every transaction done at stock exchange. Transactions on equity shares, derivative instruments, equity oriented mutual funds are taxed under this.
Perquisite Tax is levied on benefit given by employer to employee. For example, if your company provides you non-monetary benefits like car with driver, club membership, etc., all of this benefit is taxable under perquisite tax.