The Union Budget 2018 was presented by Finance Minister, Arun Jaitley, recently and when compared to last there are quite a few changes that have been made. However, to the best way to understand how the budget will directly impact taxpayers is to use a tax calculator.

The following article compares how the 2018 budget differs from the 2017 budget and its impact in the taxes one has to pay.

Budget 2018 Shifts Focus

The 2017 budget the focus from the youth, rural population, farming sector, poor healthcare, public services, speedy accountability, and honest tax administration. However, in the 2018 budget the focuses on farmers, uplifting the poor, and new aspects of health.

Changes in Tax Slabs

According to the 2018 budget, the highlights of tax slab rates are according to each category have been discussed in the following sections.

Income tax for individual tax payers who are less than 60 years and HUF are as follows:

  • For income upto Rs 2.5 lakh no tax is levied
  • For income between 2.5 lakh and 5 lakh tax levied is 5%
  • For income between 5 to lakh to 10 lakh tax levied is 20%
  • Income more than 10 lakhs tax levied is 30%
  • Surcharge of 10% is added income tax when the total income is between 50 lakh and 1 crore
  • Surcharge of 15% is added to income tax when the total income above 1 crore
  • Income tax exemption limit of 2.5 lakh is applicable when income exceeds 1 crore

Income tax for senior citizens (above 60 years and below 80 years) is as follows:

  • For income upto Rs 3 lakh no tax is levied
  • For income between 3 lakh and 5 lakh tax levied is 5%
  • For income between 5 to lakh to 10 lakh tax levied is 20%
  • Income more than 10 lakhs tax levied is 30%
  • Surcharge of 10% is added income tax when the total income is between 50 lakh and 1 crore
  • Surcharge of 15% is added to income tax when the total income above 1 crore
  • Income tax exemption limit of 3 lakh is applicable for those who are covered by Part (I) or (III)

Income tax for super senior citizens (above 80 years) is as follows:

  • Income up to 5 lakh no tax
  • Income between 5 lakh and 10 lakh tax levied is 20%
  • Income above 10 lakh tax levied is 30%
  • Surcharge of 10% is added income tax when the total income up to 1 crore
  • Surcharge of 15% is added to income tax when the total income above 1 crore
  • Income tax exemption limit of 5 lakh is applicable for those who are covered by Part (I) or (III)

How to Calculate Tax from Tax Slab Using Tax Calculator?

To calculate the exact income tax that must be paid as income tax can be estimated by using a tax calculator. There are several online tax calculators that are available online that one can avail.

The following information need to be filled up in the  tax calculator  that includes:

  • Income from salary
  • Income from capital gains
  • Income from profession or business
  • Income from house property

The next step is to list out all the deductibles that include:

  • Section 80C where maximum deduction is 1.5 lakh from PPF, ELSS investments and EPF
  • Section 80D where maximum deduction is ₹25,000 for self can be claimed from medical insurance premium
  • Section 80TTA where maximum deduction is ₹10,000 for savings bank account

Personal Taxation

When compared to last year’s budget, there difference in personal tax can be tabulated using a tax calculator. However, the personal taxation remains more or less the same since the tax slabs are, for the most part, remain the same.

In the 2018 budget, salaried taxpayers will receive a reduction of ₹40000 but at the same time the Education and Health cess has been increased. Last year, the cess levied was 3% but in the new budget it has increased to 4%.

Special Deductions and Schemes for Senior Citizens

The latest budget has introduced new tax exemptions policies and schemes especially for senior citizens. Now, senior citizens can benefit from a tax break of ₹50,000 from income from bank interest as compared to the earlier amount which was of ₹10000.

The deductions received from health insurance premium paid have been increased to ₹50000 from the previous amount of ₹30000. Additionally, an extension of Pradhan Mantri Vaya Vandana Yojana has been announced till 2010.

The current investment cap on investments for senior citizens is ₹7.5 lakh that has been increased to ₹15 lakh. In order to know check the exact tax that has to be paid at the end of the financial year a tax calculator will be helpful.

Therefore, as a best practise one must consider using a tax calculator to check their taxes payable before the date of submission draws closer. Also, it’s always better to have an estimate in mind and submitting an accurate tax filing rather than wait for tax returns that can be a tedious process.