Finance Minister Arun Jaitley presented the Budget 2018 today.
As widely expected, the government has introduced long-term capital gains, or LTCG, tax on equities without any reduction in the securities transactions tax, or STT.
Further, there was no tax relief for salaried employees except a standard deduction of Rs 40,000 in lieu of medical and transport allowance.
Here are some of the key proposals affecting investors:
- Equity: LTCG of 10% without indexation on gains of over Rs 1 lakh. Capital gains made until January 31, 2018 will be grandfathered. Which means that shares purchased up to January 31, 2018 will not be subject to this requirement. Further, gain in excess of highest price in last 6 months will only be taxed.
- Equity mutual fund: LTCG of 10% on equity mutual funds and Dividend Distribution Tax, or DDT, of 10% on dividends.
- Short-term capital gains tax: Will continue @15%.
- Senior Citizens: Deduction increased to Rs 50,000 for medical insurance and exemption with regards to interest income increased from Rs 10,000 to Rs 50,000. Increase in deduction limit for medical expenditure for certain critical illness from Rs 60,000 (senior citizens) and from Rs 80,000 (very senior citizens) to Rs 1 lakh under section 80DDB.
- ETFS: Government to introduce more Exchange Traded Funds, or ETFs, including a debt ETF for divestments.
- Gold: Government to formulate a comprehensive gold policy to develop gold as an asset class. Gold monetization scheme to be revamped.
- EPF: The contribution of women workers to Employee Provident Fund, or EPF, will be reduced to 8% in the first three years. Government will contribute 12% of the EPF of new employees for all sectors in next three years.
