With the start of the new financial year 2019-20, following are some of the changes that can affect your financial planning as a few changes related to income tax, GST and international taxation came into effect from 01st April, 2019:
A) Income Tax
Following are the changes under Income-tax law applicable from April 1, 2019:
1. Rebate under section 87A
The amount of tax rebate under Section 87A has been increased from Rs. 2,500 to Rs. 12,500. Further, it shall be available to a resident individual whose total income does not exceed Rs. 5,00,000. Taxpayers with income of up to Rs. 5 lakh during the financial year are now eligible for full tax rebate.
2. Standard deduction from salary
The limit of standard deduction for the salaried class taxpayers has been increased from Rs. 40,000 to Rs. 50,000.
3. No deemed rental income on having two residential house properties
If an individual owns more than one self-occupied house property then only one house property as per his choice is treated as self-occupied and its annual value is computed as nil. The other house property is deemed to be let-out as per section 23 and a notional rent is computed and charged to tax under the head ‘Income from House Property’. Section 23 has been amended with effect from 1/4/2019 to provide relief to the taxpayers by allowing them an option to claim nil annual value in respect of any two houses declared as self-occupied.
4. Section 54 relief extended to 2 residential houses
Any long-term capital gains, arising to an Individual or HUF, from the sale of residential house property is exempted to the extent such capital gains are invested in another residential house property. The taxpayer is allowed to invest only in one residential house in India to claim section 54 relief. From financial Year 2019-20, an assessee shall be able to claim exemption under section 54 even if he invests in two residential houses in India. However, this benefit shall be available where the amount of the capital gain does not exceed two crore rupees. Further, if the assessee exercises this option, he shall not be subsequently entitled to exercise the option for the same or any other assessment year, i.e., the assessee can exercise this option only once in a lifetime.
5. TDS on interest and rental income
TDS on Interest: Section 194A deals with deduction of TDS on interest income other than interest on securities like FD interest. Section 194A has been amended to ease the burden of compliance by way of increasing the threshold limit from Rs. 10,000 to Rs. 40,000 for deduction of tax at source on interest income, other than interest on securities, paid by a banking company, co-operative society or a post office.
TDS on Rent: The threshold limit for deduction of tax at source under section 194-I on rental income has been increased from Rs. 1,80,000 to Rs. 2,40,000.
6. PAN and Aadhar Linkage
The due date for linking PAN with Aadhaar card is extended till 30th September, 2019.
B) Goods and Services Tax
Following are the changes under goods and services tax law applicable from April 1, 2019:
1. Threshold limit for Composition Scheme
Threshold limit for Composition scheme has been increased from 1 Crore to 1.5 Crores for all the states except for special category states. For Special category states it is increased upto 75 Lakhs.
2. Real Estate Sector
a) New projects – GST rates
i) 1% without ITC – For Affordable Housing
ii) 5% without ITC – For other than Affordable housing,
b) On-going projects – Option to discharge at old or new rates. The last date exercise option is 10thMay, 2019.
3. Threshold limit for registration
i) For exclusive supply of goods: 40 Lakhs except certain states.
ii) For supply of services – 20 Lakhs for all the states.
4. Composition Scheme for Supplier of goods and Services
Such supplier can opt for Composition Scheme (upto 50 Lakhs) – GST Rate – 6%,
5. New return forms
GST RET – 1, 2, 3 applicable from 1st April 2019. However, same is deferred till further notification.
6. GSTR-1 and GSTR-3B
Due to deferment of new GST return filing system, existing system of filing of GSTR-1 and GSTR-3B shall be extended till 30th June, 2019.
C) International Taxation
Following are changes under DTAA – International Taxation applicable from April 1, 2019.
1. Amendment to DTAA with Singapore and Mauritius
Protocols with Mauritius and Singapore were signed in year 2016 to tax capital gains. The protocol gave India the right to tax capital gains on transfer of shares of an Indian Company acquired on or after 1 April, 2017. Up to March 31, 2019 tax rates on capital gains is charged at 50% of the prevailing domestic rates. With effect from April 1, 2019 capital gains shall be charged at full domestic tax rates.
2. DTAA between India and Hong Kong
Provision of DTAA between India and Hong Kong shall be applicable from 01st April, 2019.
3. Country by County Reporting (CbCR) for US based MNCs
The Government of India and the US entered into an agreement for exchange of CbCR between India and USA. As a result, Indian subsidiaries of US parented MNC groups would not be required to file CbCRs of thier respective MNCs groups in India.
References:
1. http:// https://www.incometaxindia.gov.in
2. http://www.cbic.gov.in/
3. https://www.wikipedia.org
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