BENEFITS

TO SALARY
EMPLOYEES
IN LIEU OF
BUDGET
2018
WHAT IS BUDGET ?
 It’s is a financial plan for a defined period of time,
usually a year. An estimate of costs, revenues,
and resources over a specific period, reflecting a
reading of future financial conditions and goals.
IMPORTANCE OF BUDGET ?
 Plan a spending.
 Ensure that enough funds are allocated all areas
needed and important
WHAT IS SALARY ?
 Salary is a form of payment from an employer to
an employee, which may be specified in an
employment contract.
 It includes wages, any annuity or pension, any
fee or commission, advance of salary, salary in
lieu of leave, taxable portion from all recognized
or unrecognized funds and contribution made by
the central government or any employer under
pension scheme.
BUDGET 2018
 Finance Minister ArunJaitley in Budget 2018
introduced a standard deduction of Rs. 40,000for
the salaried class. This additional deduction has been
proposed in lieu of existing deductions of Rs. 15,000
for medical reimbursement and Rs. 19,200 for
transport allowance. The finance minister said the
move will benefit 2.5 crore salaried employees and
pensioners who normally do not enjoy any allowance
for transport and medical expenses. The revenue cost
for the government will be about Rs. 8,000 crore, Mr
Jaitley said. However, the finance minister also
raised cess on income tax to 4 per cent from 3 per cent
for individual taxpayers.
CONTT…
 Budget 2018 proposes several tax benefits for the
senior citizens. These include: increase in tax
exemption limit for interest income from banks
and post offices from Rs 10,000 to Rs 50,000 and
increase in tax break on health insurance and
medical expenditure under sections 80D and
80DDB. Both these would give a big relief to this
category of tax payers as most senior citizens
derive most of their income from bank FDs and
post office schemes.
CONTT.
 The government has raised the limit of deduction
for health insurance premium or medical
expenditure from Rs 30,000 to Rs 50,000 under
Section 80D. All senior citizens will now be able
to claim the Rs 50,000 per annum in respect of
any health insurance premium or any general
medical expenditure incurred.
 FM Jaitley announced raising the limit of
deduction for medical expenditure in respect of
certain critical illness from, Rs 60,000 in case of
senior citizens and from Rs 80,000 in case of very
senior citizens, to Rs 1 lakh in respect of all
senior citizens, under section 80DDB.
INCREASE IN CESS

 Budget 2018 has proposed no changes in the

income tax rates and slabs. However, cess has
been hiked to 4 per cent from the current 3%
across the board for the taxpayers.

Due to this hike in cess, the tax liability for the

highest tax slab (assuming income Rs 15 lakhs)
has increased by Rs 2,625. Similarly in the
middle income tax slab, the tax outgo increases
by Rs 1,125 and a nominal increase in the tax
liability of Rs 125 for lowest tax slab.
WHAT IS DEDUCTION ?
 Standard deduction allows for a flat deduction from
income of a salaried individual towards expenses that
would be incurred in relation to his or her
employment. No proof is required for claiming
standard deduction. Standard deduction was earlier
available for salaried individuals previously, till it
was abolished with effect from Assessment Year
2006-07. Standard deduction, which existed till
assessment year 2005-06, allowed salaried
individuals to claim a flat deduction from his or her
salary income of Rs. 30,000 or 40 per cent of salary
whichever is less for gross salary Rs.5 lakh or below.
If the gross salary exceeded Rs.5 lakh, a standard
deduction of Rs. 20,000 was allowed.
HOW STANDARD DEDUCTION WILL
IMPACT YOUR INCOME TAX?

 Since standard deduction will be introduced in

lieu of medical reimbursements and transport
allowance, net increase in deduction would be a
maximum of Rs. 5,800. This would help a
salaried individual in the highest 30 per cent tax
bracket to save around Rs. 1,800 in terms of
income tax payout.

However, the increase in Cess from 3 per cent to

4 per cent for individual taxpayers takes away
some of the benefit arising from introduction of
standard deduction.

“
CONTT….
 Standard deduction is reintroduced but taking
back exemption for conveyance allowance
(Rs.19,200 annually) and medical reimbursement
(Rs. 15,000) doesn’t result in much savings in the
hands of the salaried class. Further, additional 1
per cent cess would further reduce this saving
and will even result in higher tax for people in
higher tax brackets
 Here's how these tax changes will impact your
tax liability going forward in 2018-19
(Assessment Year 2019-20), if you are a salaried
employee below 60 years of age.
CURRENT STANDARD
DEDECTION
YEAR RUPEES 40,000

STANDARD
PREVIOUS DEDECTION
YEAR RUPEES
19,200 + 15,000
THANK YOU…