1) Standard deduction to salaried individuals and pensionersTransport allowance and medical reimbursement are two tax deductions which almost every salaried taxpayer easily claims. The Finance Act, 2018 eliminated these two tax benefits. The tax benefit from the transport allowance is Rs 19,200 p.a. (Rs 1,600 p.m.), while from reimbursement of medical expenses, it is Rs 15,000 p.a. At first, it may appear to be a loss of Rs 34,200 to you (Rs 19,200 + Rs 15,000). But, you don’t need to worry as a standard deduction of Rs 40,000 has been brought in their place. This is, in fact, a piece of good news for you since the overall tax benefit has increased by Rs 5,800 (Rs 40,000 – Rs 34,200). This tax benefit has also been extended to the pensioners. Pensioners were not allowed any tax benefit of transport allowance and medical reimbursement. Therefore, they can gain Rs 40,000 as tax-free income.
2) Enhanced deduction under section 80DYou must be familiar with this deduction under section 80D that you can claim when you pay a premium for medical insurance giving coverage to you or your family. The tax deduction currently allowed is up to Rs 30,000 of the insurance covers you, your spouse or your children. You can get an additional deduction of Rs 30,000 on premium paid if you have a medical cover for your parents aged 60 years and above. If they are aged below 60 years, then the tax deduction cannot exceed Rs 25,000. However, if anyone of you, your spouse or your parents is not covered under any insurance policy, then you can claim a tax deduction up to Rs 30,000 for the medical expenses incurred on them. Union budget 2018 has extended this benefit to senior citizens as well and increased the deduction limit from Rs 30,000 to Rs 50,000. A summary of deduction allowed under section 80D is explained in the table below
|Nature of the amount spent||Family Member||Parents|
|Age below 60 years (value in Rs)||Age above 60 years (value in Rs)||Age below 60 years (value in Rs)||Age above 60 years (value in Rs)|
|A) Medical Insurance||25,000||50,000||25,000||50,000|
|B) Central Govt Health Scheme||25,000||50,000||–||–|
|C) Health Check-up*||5,000||5,000||5,000||5,000|
|D) Medical Expenditure||–||50,000||–||50,000|
Workers putting resources into NPS get exclusion up to 40% of the all-out collected parity in their NPS account at the season of withdrawal when they quit or close the plan. The financial plan 2018 has stretched out this tax reduction to everybody putting resources into NPS.