With the start of new fiscal year, here's how your life will be changed: 5 key things to know

As the new fiscal year kick-started, the Budet proposals finance minister Arun Jaitley tabled before the Parliament on February 1 would take place. While one of the biggest change would be the coming of the LTCG tax in effect, there are other several changes that would give your finances a complete makeover. 

And not just the new changes, in light of the Budget 2018, there are several day to day essential commodities that are also ready to take a toll on your pocket. 

Below we have listed out the changes and the complete list of items that had become expensive from April 1. 

1. Reintroduction of the LTCG tax 

One of the main and biggest change that came into effect from April 1 is the return of the Long Term Capital Gain tax. 

Long term capital gains mean gains arising from the transfer of long-term capital asset. The Finance Bill, 2018 proposes to provide for a new long-term capital gains tax regime for the following assets–

i. Equity Shares in a company listed on a recognised stock exchange;
ii. Unit of an equity oriented fund; and
iii. Unit of a business trust.

The new regime under the Finance Bill 20178 would be applicable to the above assets if,
a. the assets are held for a minimum period of twelve months from the date of acquisition; and
b. the Securities Transaction Tax (STT) is paid at the time of transfer. However, in the case of equity shares acquired after 1.10.2004, STT is required to be paid even at the time of acquisition (subject to notified exemptions).

2. Standard Reduction

While presenting his fifth and the BJP government's last full- year budget before general elections next year, Finance Minister Arun Jaitley said that "a standard deduction of Rs 40,000 in lieu of the present exemption in respect of transport allowance and reimbursement of miscellaneous medical expenses" is proposed to be allowed to individual tax payers.

A standard deduction of Rs 40,000 in lieu of transport allowance and medical reimbursement had come into effect from Sunday.

Below we have explained how the deduction of Rs 40,000 would work for people in different tax slab. 

1. The maximum gain from the above mentioned announcement would be of someone who falls in the income bracket of above Rs 10 lakh a year. 

And with various taxes, that person would be paying Rs 1,15,875 as tax. But with new rules, he/she would now save around Rs 7,195 annually. 

But as your income rises, the benefit of the deduction starts getting contracted with higher cess. 

Similarly, at income levels below Rs 10 lakh, the benefit is not quite as much and decreases as income does. The exception to this declining trend happens at a non-salary income of Rs 2.9 lakh. Such a person would now pay Rs 2,060 in taxes and cesses. Post this Budget, they pay nothing.

3. Educational cess hiked to 4%

With the new fiscal year, the educational cess which previously was of two per cent had been hiked to four per cent now. 

4. New tax benefits to senior citizens
While the exemption limit on income from interest for senior citizens has been raised five times to Rs 50,000 per year, the limit of deduction for health insurance premium and medical expenditure has been raised to Rs 50,000 from Rs 30,000 under section 80D of the I-T Act.

For senior and very senior citizens, the tax deduction for critical illness will be Rs 1 lakh from April 1, as against the existing limit of Rs 60,000 for senior citizens and Rs 80,000 for very senior citizens.

5. National Pension System is tax free
In order to provide further relief to the NPS subscribers, from Sunday, a new clause (12B) has been inserted in Section 10 of the Income Tax Act, 1961, to provide exemption on partial withdrawal not exceeding 25 per cent of the contribution made by an employee in accordance with the terms and conditions specified under Pension Fund Regulatory and Development Authority Act, 2013, and regulations made there under. This benefit will be effective on partial withdrawal made by the subscriber after April 1, 2017.

Further, contribution up to 20 per cent of the Gross Income of the self-employed individual (other than salaried class) would be deductible from the taxable income under Section 80CCD (1) of the Income Tax Act, 1961, as against 10 per cent earlier.

Besides the above changes, below are the items that had become costlier from April 1. 

Cars and motorcycles

Mobile phones

Silver

Gold

Vegetable, fruit juices, including orange and cranberry

Sunglasses

Miscellaneous food preparations other than soya protein

Perfumes and toilet waters

Sunscreen, suntan, manicure, pedicure preparations

Preparations for oral dental hygiene, denture fixative pastes and powders; dental floss

Pre-shave, shaving or after-shave preparations,

Deodorants, bath preparations, depilatories, perfumery

Scent sprays and similar toilet sprays

Truck and Bus radial tyres

Silk Fabrics

Footwear

Coloured gemstones

Diamonds

Imitation jewellery

Smart watches/wearable devices

LCD/ LED TV panels

Furniture

Mattresses

Lamps

Wrist watches, pocket watches, clocks

Tricycles, scooters, pedal cars, wheeled toys, dolls’ carriages, dolls, toys, puzzles of all kinds

Video game consoles

Articles and equipment for sports or outdoor games, swimming pools and paddling pools

Cigarette and other lighters, candles

Kites

Edible/vegetable oils such as olive oil, groundnut oil

How much the price increase would be? 

The price hike related to some certain items are listed as follows: 

Prices of TV will increase 5%

Mobile phones will increase 5%

Silver prices will increase by 3%

Footwear prices will increase by 5%

Phone's battery's prices will also increase by 5%

Gold prices will witness an increase of 3%

However, there may be certain commodities that will become cheaper, they are, Raw cashew will have lower prices as the custom duty on the same has been lower by 2.5%

Prices of petrol and diesel to be dropped by Rs 2 after reduction in excise duty

Solar tempered glass

Raw materials used in making cochlear implants.