Changes in Income Tax/GST Provisions Applicable From 1st April, 2019

With the starting of new Financial Year 2019-20 some changes have been made in the provisions of Income Tax Laws which were proposed in the Interim Budget 2019 by Hon’ble Finance Minister Piyush Goyal. These changes will be applicable from 1^st April, 2019 onwards which are as follows:

♦ SECTION 87A REBATE

 Individual taxpayers with annual income uptoRs. 5 lacs to get full tax rebate. The income limit eligible to avail tax rebate under section 87A has been raised from Rs. 3.5 lacs to Rs. 5 lacs.

Also the limit of tax rebate under Section 87A has been increased from Rs 2,500 to Rs 12,500.

♦ STANDARD DEDUCTION FROM SALARY

For salaried class taxpayers the standard deduction limit has been increased by Rs 10,000 and has been made Rs. 50,000 which was Rs. 40,000 for Financial Year 2018-19. This standard deduction will be reduced from gross salary of the individual which will help him to reduce his taxable income.

♦ NO DEEMED RENTAL INCOME ON HAVING TWO RESIDENTIAL HOUSE PROPERTIES

Earlier you could own only one house as self-occupied but need to pay notional rent on the second house even if it is self-occupied.

As per the new provisions applicable from FY 2019-20 exemption has been proposed on the income tax from notional rent on second self-occupied house. Home owners will no longer have to pay tax on notional rent from second self-occupied house property.

This amendment has been made 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.

However, there is no change in aggregate limit for deduction in respect of interest on housing loan. The aggregate deduction for interest on housing loan for both houses cannot exceed Rs. 30000 or Rs. 200,000.

♦ SECTION 54 RELIEF EXTENDED TO TWO 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 reliefs.

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 only on satisfying following two conditions:

• The long term capital gain from the sale of such house property shall not exceed Rs. 2 crores.
• The benefit can be claimed only once in the taxpayer’s lifetime.

♦ TDS ON INTEREST INCOME

As per the existing provisions of Section 194A banks and post office are allowed to deduct 10% TDS if the interest earned from a savings account exceeds Rs. 10,000 in a single financial year.

Section 194A has been amended in the budget 2019 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 RENTAL INCOME

Budget 2019 has increased the threshold limit for TDS on rent paid by non-individuals.

Earlier this threshold was Rs. 1,80,000 and now it has been increased to Rs. 2, 40,000. TDS on rent is liable to be deducted by the person making the payment if the total amount to be paid during the year exceeds Rs. 2, 40,000 p.a.

GOODS AND SERVICES TAX – NOTIFICATIONS APPLICABLE FROM 1^ST APRIL, 2019

♦ GST REGISTRATION EXEMPTION INCREASED TO RS. 40 LACS

Earlier the threshold limit for being registered under GST was Rs. 20 Lacs this exemption has been increased to Rs. 40 Lacs via Notification No. 10/2019.

As per the Notification No. 10/2019 persons who are engaged exclusively in supply of goods and whose aggregate turnover in the financial year does not exceed Rs. 40 Lacs are exempt from getting GST registration. This exemption has been given subject to some exceptions:

• Persons required to take compulsory registration under section 24 of the said Act;
• Persons engaged in making supplies of the goods such as Ice-Cream and other edible ice, pan masala and tobacco and other manufactured tobacco substitutes.
• Persons engaged in making intra-State supplies in the States of Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Puducherry, Sikkim, Telangana, Tripura, Uttarakhand; and
• Persons exercising option under the provisions of sub-section (3) of section 25, or such registered persons who intend to continue with their registration under the said Act.

♦ THRESHOLD LIMIT FOR COMPOSITION SCHEME INCREASED TO RS. 1.5 CRORES

The existing threshold limit on gross turnover in previous financial year to avail of the composition scheme has been increased from Rs. 1 crore to Rs. 1. 5 crores. In respect of special category States (North-Eastern States), the threshold limit has been increased from Rs. 50 lakhs to Rs. 75 lakhs.

Consequently, the taxable persons can substantially reduce their compliance burden as they would be required to file GST returns on quarterly basis instead of monthly basis.This amendment has been made via Notification No. 14/2019.