Just like every year, this year’s budget also brought a number of tax saving reforms for the common man with special focus on senior citizens. Let’s have a look at the 5 major amendments in the Income-tax laws which can help you save tax in the FY 2018-19.

1) Standard Deduction

The Finance Act 2018 has replaced two common tax benefits namely Transport allowance & Medical reimbursement with a standard deduction of Rs 40,000. The tax benefit from Transport allowance was Rs 19,200 while from Medical reimbursement was Rs 15,000. This is a beneficial move for the taxpayers since they can now save additional Rs 5,800. This tax benefit is also available to pensioners.

2) Increased deduction limit under section 80D

Section 80D, which gives tax deduction on insurance premium paid by the taxpayers will now give you a higher tax benefit. The deduction limit of Rs 30,000 which was available when anyone of you, your spouse or your parents are not covered under any insurance scheme, has been extended to the senior citizens as well. The deduction limit has also been increased in this case from Rs 30,000 to Rs 50,000.

3) Increase in deduction limit under section 80DDB

Section 80DDB of the Income Tax Act offers a deduction on expenses incurred on the treatment of critical illness. The deduction limits were Rs 80,000, Rs 60,000 & Rs 40,000 for super senior citizens, senior citizens & citizens below 60 years of age respectively. While the upper limit of tax benefit has remained unchanged for the taxpayers below 60 years of age, it has been increased to Rs 1 lakh for both senior & super senior citizens.

4) Increased exemption limit on bank interest

Another tax benefit has been introduced for the senior citizens through the introduction of a new section 80TTB in the Income Tax Act to allow a deduction up to Rs 50,000 on interest earned from bank deposits to senior citizens. Section 194A has also been amended to disallow banks from deducting tax from payment of interest up to Rs 50,000 made to senior citizen.

5) Enhanced tax benefit on gratuity

Through the Union Budget 2018, the government has increased the tax exemption on gratuity from Rs 10 lakh to Rs 20 lakh. This enhanced benefit will be available to all the taxpayers receiving gratuity on or after 1st April 2018.

As a taxpayer, you will be able to claim all these benefits when you file your returns next year, i.e. AY 2019-20. You can also take assistance from an Income Tax e-filing intermediary to optimise your tax savings and accurate filing.