From April 1, 10 income tax returns filing changes you will have to deal with

From April 1, 2018, a new fiscal is set to start and along with it taxpayers will have to contend with a number of changes introduced by the NDA government in terms of income tax returns filing. While the changes are simple, they still have to be correctly assessed and then given adequate explanation when you eventually file your tax returns. Not knowing them is not an option. Ultimately, a taxpayer will have to deal with them. And the sooner they do, the better it is as otherwise they will be left with no option but to try and fix it at the last moment and that is a certain recipe for disaster since mistakes will be made in the rush. Those who do not end up filing returns even face the prospect of stiff penalties that may keep hurting them all through their lives. So, what are these 10 income tax returns filing changes? Read on to find out:

1) Education, Secondary and Higher Education cess of 3 per cent has been replaced by a new cess – the Health and Education Cess. It will be levied at the rate of 4 per cent.

2) Standard Deduction Reintroduction will replace conveyance allowance (cap of Rs 19,200), and medical reimbursements (cap of Rs 15,000). Standard Deduction of a maximum of Rs 40,000 for salaried employees starts April 1.   

3) On Deduction in interest income for senior citizen an extra benefit is available from April 1. Now interest income up to Rs 50,000 will be tax-free, instead of current limit of Rs 10,000. 

4) Deduction for medical expenditure for critical illness limits have been hiked to Rs 100,000 uniformly for both categories - for senior citizens above 60 years age and for super senior citizens above 80 years age. 

5) On Deduction for health insurance, medical expenditure for senior citizens, a maximum deduction of up to Rs 50,000 can be claimed now.

6) Tax-free withdrawals will be available to the tune of 40 per cent of the total amount payable to employees on closure of their account or if they opt out.

7) LTCG tax on equities of 10 per cent on equity investments in case capital gains exceed Rs 1 lakh in a year reintroduced. 

8) A single premium health insurance plan for a cover exceeding 1 year will now mean tax deduction on offer on a proportionate basis.

9) A 10 per cent dividend distribution tax will be charged on mutual funds. 

10) Any compensation due to any person in connection with the termination or the modification of the terms and conditions of any contract relating to his employment shall be taxable under the head income from other sources. Highest tax rate for an individual who has a taxable income of more than Rs one crore is nearly 36 per cent.