It’s that time of the year when you need to file your tax returns, the initial deadline for which is 31st July 2018. As a taxpayer, it is necessary for you to keep updated of the latest amendments to enable a salaried individual to compute taxes and file individual tax returns. The six changes you need to keep in mind while computing taxes to file ITR 2018-19 would be:
1. The applicable slab rate with respect to an individual having taxable income between Rs.2.5 lakh to Rs.5 lakh has been reduced from 10% to 5%. However, there has been no change in the tax rates for other slabs.
2. Earlier, an individual having taxable income up to Rs.5 lakh was entitled to a tax rebate. Now, this limit has been reduced to Rs.3.5 lakh. Also, the tax rebate has been reduced from Rs.5,000 to Rs.2,500.
3. For individual taxable income of more than Rs 50 lakh but not exceeding Rs.1 cr, a surcharge of 10% is applicable. Further surcharge of 15% continues for individuals having an income of more than Rs.1 cr.
4. Until AY 2017-2018, there was no restriction on the setting off of losses on rented property or deemed to be let-out property (arising on account of claiming interest payable on loan taken) against other income arising in the same financial year. Now with effect from AY 2018-2019, such losses can be set off only up to Rs 200,000 against other income. Any excess loss can be carried forward for set-off against income from house property over the following eight tax years.
5. For an individual having long-term capital gains arising from the sale of property, there is a change in the base year for indexation purpose from 1st April 1981 to 1st April 2001. Accordingly, the government has notified the new cost inflation index. In the case of sale of immovable property, there has been a relaxation in the holding period from 3 years to 2 years, to be considered as long-term capital gains.
6. In case an individual misses filing his income tax returns by the due date, a fee of Rs.5,000 will be levied if the return is filed on or before 31st December 2018; Rs.10,000 will be levied for returns filed after 31st December 2018. However, if the total income does not exceed Rs.5 Lakh, a fee of Rs.1,000 will be levied.
Sabyasachi Paul has been associated with equity research and advisory on equity markets in India for over 9 years & currently heads the equity research desk of Eastern Financiers Ltd, Kolkata. He also manages a portfolio on the online platform Kristal. Find link to the strategy named ‘The Tortoise’