A standard deduction from salary income up to INR 40,000 in lieu of reimbursement of medical expenses and transport allowance has been given. Simultaneously, tax exemptions on transport allowance of INR 19,200 and medical reimbursement of INR 15,000 have been discontinued effective tax year 2018-19.
Computation of long-term capital gains (LTCG)
For equity shares and equity oriented mutual funds, which have been sold on recognised stock exchanges in India and security transaction tax (STT) has been paid, the LTCG earned (if any) is fully exempt from tax. For LTCG to be exempt in such cases, STT should also be paid on acquisition stage for shares acquired on or after 01 October, 2004 (subject to certain exceptions as prescribed in this regard acquisition of shares in IPO (initial public offer), bonus or rights issue by a listed company, etc.).
- Effective 01 April 2018, the above mentioned exemption has been withdrawn and LTCG exceeding INR 0.1 million would be taxable at the rate of 10% (without any indexation benefit). It is important to note that gains accrued based on FMV as on 31 January, 2018 has been grandfathered, i.e. would not be liable to tax.
- For transaction of sale effective 01 April 2018, the cost of acquisition would be determined as higher of the following:
- Actual cost of acquisition, and
- The lower of:
- FMV as of 31 January, 2018.
- The full value of consideration arising on transfer.
Health and Education Cess
Health and Education Cess at the rate of 4% of the income tax and surcharge (if applicable) will be levied to compute the final tax liability of individuals.