prpri Budget 2019: 19 Proposed key Amendment in Income Tax Act, 1961 Budget 2019: 19 Proposed key Amendment in Income Tax Act, 1961

Analysis of Finance Bill (02) 2019

The major proposed amendment by Finance bill (02) 2019. Few amendments which are not so important are not covered.

1. Amendment in Section 2(19AA) (Definition)

One of the condition to qualify the definition of demerger is “The resulting company will record the property and liability of the undertaking/s at the value as appearing the BOA of demerge company immediately before the demerger.

A proviso has been proposed to be inserted to relax this condition for complying with the IND AS.

2. Amendment in Section 10 (Exemption)

a. Clause 12A- 60% exemption on closure of NPS.

b. Clause 34A- To regularized the malafied practices by the promoters of Listed Co. on Buy Back of Share. Simultaneously Section 115QA has been amended to provide the tax levy on Buy-Back of share by Listed Co. also.

3. Amendment in Section 12AA (Charitable Institution)

As of now (i.e. Existing Provision) Pr. Com. or Com. to whom application for registration has been filed has a power to call such information or documents to satisfy himself about the genuineness of activities of the trust or institution.

The proposed amendment will cover other applicable law on the trust or institution. Meaning thereby they shall demand such information or documents to satisfy himself about the compliance of requirement as specified by the other applicable law also.

Simultaneously amendment has been proposed in Sub-Section 4 of that section which deals with the cancellation of Registration- Non Compliance with other applicable law will lead to cancellation of registration.

4. Amendment in Section 40 (Disallowance of Expenses)

Section 40 deals with the disallowance of expenses where TDS not deducted. 1st proviso to section 201(1) which provide that the if the receiver of income i.e. payee filed their return considering the such income and paid the taxes their on and provide the certificate from chartered accountants in that respect then the deductor shall not be treated as assessee in default.

Whatever stated above is presently for resident payee only.

Amendment has been proposed to cover non resident also. Accordingly, the following proviso inserted in the 40(a)

“Provided further that where an assessee fails to deduct the whole or any part of the tax in accordance with the provisions of Chapter XVII-B on any such sum but is not deemed to be an assessee in default under the first proviso to sub-section (1) of section 201, then, for the purposes of this sub-clause, it shall be deemed that the assessee has deducted and paid the tax on such sum on the date of furnishing of return of income by the payee referred to in the said proviso;”

5. Amendment in Section 43B

Insertion of clause (da) which provide Interest on loan from NBFC will allowed on the payment basis.

6. Amendment in Section 54GB (Exemption)

Good step by the Govt. by reducing the restriction on disposal of assets, from 5 Years to 3 Years, being a computer or computer software.

7. Amendment in Section 80CCD (Deduction)

Proposed amendment benefited the employee of the central government on account of contribution by the employer being CG- 14% of the salary shall be proposed to be allowed. However, in case of other employee it will remain at 10% of salary.

8. Insertion of New Section 80EEA (Deduction)

(1) In computing the total income of an assessee, being an individual not eligible to claim deduction under section 80EE, there shall be deducted, in accordance with and subject to the provisions of this section, interest payable on loan taken by him from any financial institution for the purpose of acquisition of a residential house property.

(2) Quantum of deduction- 1,50,000/-

(3) Conditions

a. Loan should be sanction during 01-04-19 to 31-03-20

b. SDV of the residential house <= 45,00,000/-

c. Not own any HP on the date of sanction of loan.

9. Insertion of New Section 80EEB (Deduction)

Additional deduction of 1,50,000/- will be allowed in respect of Interest on loan taken for the purpose of purchase of electric vehicle.

Loan shall require to be sanction during 01-04-2019 to 31-03-2023 by Financial Institution. (FI- Banking Co. on which Banking Regulation Apply)

10. Amendment in Section 139 (Filling of Return)

Existing provision specify the filling of return if total income of the assesse being Inv. HUF. AOP. BIO. AJP before claiming the deduction u/s 10(38), 10A, 10B, 10BA, exceeds the 2,50,000/-.

Now in the above list section 54, 54B, 54D, 54EC, 54F, 54G, 54GA and 54GB has been inserted. Meaning thereby, even if Total income is less than the 2,50,000/- after claiming the benefit of the above provision the assessee has to file return.

Also the following proviso has been inserted to enable mandatory filling of ITR by the assessee specified below:

a. A person deposited aggregate amount exceeding 1 Crore in one or more current accounts maintaining with baking company and co-operative bank.

b. A person incurred as aggregate amount exceeding 2,00,000/- for foreign traveling for himself or for any other person.

c. A person incurred expenditure on consumption of electricity for an aggregate amount of Rs. 1,00,000/-.

d. Any other person as may be prescribed.

11. Amendment in Section 139A (Quoting of PAN in specified transaction)

New sub-section 5E inserted to enable use of Aadhar or PAN interchangeably.

Clause(a)- Which provide that where a person not holding PAN but holding Aadhar and required to furnish or quote PAN may furnish/Quote his Aadhar and the said person shall be allotted a PAN. For this purpose, Govt. will prescribe the method of allotment of PAN.

Clause(b)- Provides where PAN of the assessee has linked with their Aadhar, the assessee is free to quote or furnish a Aadhar in place of PAN.

12. Amendment in Section 194DA

Amendment has been proposed to deduct TDS @ 5% (Earlier 1% on Total Payment) on “only Income Part” of the payment made under LIP.

Still there is a controversy regarding to the Liability of deduction of TDS, Because, proviso state that liability arise where payment or aggregate of “Such payment” 1,00,000/- or more.

If we read Section 194DA which start as……

“Any person responsible for paying to a resident any sum under a life insurance policy, including the sum allocated by way of bonus on such policy”

Still this amendment is not going to benefit the person who receiving the payment and no other income which require him to file the return. Because he has to file ITR for calming the refund of TDS so deducted.

13. Amendment in Section 194IA

Amendment has been made to cover those Saler and deductor who charging the consideration of Immovable property in such a planned way to defer the liability to deduct the TDS.

For Example: Total Consideration- 65 Lacs
For Property- 40 Lacs
(For club membership Fees
Advance Club membership fees
Electricity, water , Parking
etc.…………………….) 25 Lacs

Since Consideration for Imv Property is less that 50 Lacs, hence TDS not deductible.

To curb this type of practices a explanation has been inserted a under:

“consideration for immovable property” shall include all charges of the nature of club membership fee, car parking fee, electricity or water facility fee, maintenance fee, advance fee or any other charges of similar nature, which are incidental to transfer of the immovable property.

14. Insertion of New Section 194M (TDS)

Applicability- Individual and HUF (Not cover u/s 194C and 194J)

Payee: Resident payee

Nature of Payment: For carrying out any work (including supply of labour for work) under a contract or for professional services

Threshold Limit: Aggregate Rs. 50 Lacs during PY

TDS Rate: 5 % on total amount

Requirement of TAN: No.

Simple return cum challan statement.

15. Insertion of New Section 194N (TDS on Cash Withdrawal)

Liability on: Banking Co. Co-operative Society or Post Office

Nature of Transaction: Cash Withdrawal

Threshold Limit: Rs. 1 Crore during the PY

Rate of TDS: 2% on the amount exceeding 1 Crore

16. Substitution of Section 206A (Quarterly Return)

Where TDS is not required to be deducted u/s 194A due to non-exceeding the threshold limit prescribed under that section, Every, person making such payment which not exceeds the threshold limit under that section shall require to file a Quarterly Return.

17. Insertion of New Section 269SU (Mandatory to Provide Facility of accepting payment prescribed electronic mode)

Applicability: Every person, carrying on business, if his total sales, turnover or gross receipts, as the case may be, in business exceeds fifty crore rupees during the immediately preceding previous year.”

Mode of Payment: Will be Prescribe

18. Insertion of New Section 271DB (Penalty not to Provide Facility of accepting payment prescribed electronic mode as specified in 269SU)

Quantum of Penalty- 5000/- per day during which such default continue

19. Other Amendment related to Penalty

  • Non- quoting of PAN or Aadhar as required u/s 139A would result in penalty of Rs. 10000/- for each such default

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July 2021