“Key Changes in Direct Taxes”

(Budget – 2018)


Here are the highlights of Finance Minster Mr. Arun Jaitley’s speech:


  • Imported electronics, including phones and TVs, will now get more expensive as government proposes to increase custom duty on mobiles from 15% to 20% and some parts of TVs to 15%.
  • However Education cess is being increased from 3 to 4 % to be known as *Education and Health cess*.


  • No change in Tax Rate. All persons including individuals, HUF, Firms and Companies to pay same tax.

  • *Standard Deduction of Rs 40,000 for salaried employees*. However benefit of transport allowance of Rs 19,200 and Medical Reimbursement of Rs 15,000 under Section 17(2) are being withdrawn. Thus net benefit to salaries class only Rs 5,800
  • Rs 50,000 benefit to senior citizens for investment in mediclaim Premium Under Section 80D.
  • *Long term Capital gain exemption* under section 10(38) in respect of *listed STT paid shares* being withdrawn. However *capital gain up to 31.1.2018 shall not be taxed* as cost of acquisition will be taken as Fair Market Value as on 31.1.2018. Tax on *STT paid long term capital Gain will be 10%* under Section 112A. Further such tax will be liable for TDS.

  • *Penalty for non-filing financial return as required under section 285BA being increased to Rs 500 per day*.

  • All companies irrespective of income to file return and in case it is not filed, such companies will be liable for prosecution irrespective of the fact weather it has tax liability of Rs 3,000 or not.

  • 100% tax exemption for the first five years to companies registered as farmer producer companies with a turnover of Rs. 100 crore and above.

  • Provision of Section 43CA, 50C and 56(2)(x) being amended to allow *5% of sale consideration in variation vis a vis stamp duty value*. On account of location, disadvantage etc.

  • Provision of section 40(ia) and 40A(3) and 40A(3A)are being made applicable to *Charitable Trust*. Hence expenditure incurred without deduction of tax and in cash will not be eligible as application of income under section 10(23C) and section 11(1)(a).

  • However for Domestic Companies having total turnover or gross receipts not exceeding Rs 250 crores in Financial year 2016-17 shall be liable to pay *tax at 25%* as against present ceiling of Rs 50 crore in Financial year 2015-16.


  • Contribution of 8.33% to EPF for new employees by the govt for three years and 12% govt contribution to EPF in sectors employing large number of people.
  • Government proposes to increase the target of providing free LPG connections to 8 crore to poor women.


  • 4 new government medical colleges and hospitals to be set up by upgrading existing district hospitals.

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