Income Tax slabs remain; some relief to salaried class, senior citizens

Finance minister Arun Jaitley has belied popular expectations with no change in personal income tax slabs for salaried employees in the current fiscal year, even as he noted an increase in the number of people filing income tax returns in the last year.

"The government has made many positive changes in the personal income tax rates applicable to individuals in the last three years, therefore, I do not wish to make any changes to this," he said.

However, in some relief for the salaried class, Jaitley announced that the standard deduction of Rs40,000 has been increased in respect of transport allowance and reimbursement of miscellaneous medical expenses.

Presenting the Budget, finance minister Arun Jaitley said, "Standard deduction shall significantly benefit the pensioners also, who normally do not enjoy any allowance on account of transport and medical expenses. The revenue cost of this decision is approximately Rs8,000 crore. The total number of salaried employees and pensioners who will benefit from this decision is around 25 million."

"Apart from reducing paper work and compliance, this will help middle class employees even more in terms of reduction in their tax liability," the finance minister further said.

In his last Budget, Jaitley had proposed to reduce existing rate of taxation of those with income between Rs2.5 lakh and Rs5 lakh from 10 per cent to 5 per cent in Budget 2018-19.

Jaitley also made significant announcements for incentives aimed towards senior citizens. The exemption of interest income on deposits with banks and post offices has been increased from Rs10,000 to Rs 50,000 and TDS shall not be required to be deducted on such income.

This benefit shall be available also for interest from all fixed deposits schemes and recurring deposit schemes.

He also announced raising the limit of deduction for health insurance premium and medical expenditure from Rs30,000 to Rs50,000 under section 80D for senior citizens.