(Applicable for AY 2020-21 i.e FY 2019-20)

Some important amendments made by Finance Act 2019 to be noted while filing returns for AY 2020-21

1. Rebate under Section 87A:

The rebate is available to a resident individual if his total income does not exceed Rs. 5,00,000. The amount of rebate shall be 100% of income-tax or Rs. 12,500, whichever is less. (i.e no tax for resident individual whose total income does not exceed Rs. 5,00,000/-)

2. Surcharge:

Nature of Income Range of Total Income
Up to Rs. 50 lakh More than Rs. 50 lakh but up to Rs. 1 crore More than Rs. 1 crore but up to Rs. 2 crore More than Rs. 2 crore but up to Rs. 5 crore More than Rs. 5 crore
Short-term capital gain covered under Section 111A Nil 10% 15% 15% 15%
Long-term capital gain covered under Section 112A Nil 10% 15% 15% 15%
Any other income* Nil 10% 15% 25% 37%

Surcharge is levied on the amount of income-tax at following rates if the total income of an individual, HUF, Artificial judicial person assessee exceeds specified limits:

3. Domestic Company

Income-tax rates applicable in case of domestic companies for Assessment Year 2020-21 are as follows:

Particulars Income Tax Rates
Where its total turnover or gross receipt during the previous year 2017-18 does not exceed Rs. 400 crore 25%
Where it opted for Section 115BA 25%
Where it opted for Section 115BAA 22%
Where it opted for Section 115BAB 15%
Any other domestic company 30%

4. Standard Deduction from Salary:

This limit has been increased to Rs. 50,000 from FY 2019-20.

5. Depreciation:

Block of Assets %
Motor Cars, other than those used in a business of running them on hire, acquired on or after the 23rd day of August, 2019 but before the 1st day of April, 2020 & is put to use before the 1st day of April,2020 30%
Motor buses, motor lorries and motor taxis used in a business of running them on hire, acquired on or after the 23rd day of August, 2019 but before the 1st day of April, 2020 & is put to use before the 1st day of April,2020 45%

6. TDS:

  • Sec 194A: TDS on interest other than interest on securities.

The limit for tax deduction has been increased to Rs. 40,000/- (Rs. 50,000/- in case of senior citizens) where the payer is: –

1. Banking company or any bank or a banking institution

2. Co-operative society engaged in the business of banking

3. Post office (on deposit under scheme framed and notified by Central Government).

  • Sec 194DA: Payment in respect of LIP.

TDS deduction at 5% on the income component and not the gross maturity value.

(Under section 10 (10D), maturity proceeds received under a life insurance policy are exempt from tax. However, the benefit is not extended to policies where the annual premium exceeds 10% (20% in case of policies sold prior to April 2012) of the sum assured.)

  • Sec 194I: TDS on Rent

The limit has been raised to Rs. 2,40,000/- for FY 2019-20 & onwards.

  • Sec 194N: TDS on Cash withdrawal in excess of Rs. 1 Crore

Section 194N is made applicable from September 1, 2019. Hence, every bank or post office is required to deduct TDS on cash withdrawal made on or after September 1, 2019. The tax shall be required to be deducted only when the aggregate amount of cash withdrawn by a person during the previous year, from one or more of his bank or post office account, exceeds Rs. 1 Crore.

  • Sec 194M: TDS on payment to Resident Contractors & Professionals

It applies to those individual/ HUF who are not required to get their books audited u/s 44AB and when the total amount paid to a resident individual, for carrying out any contractual work or providing any professional service, in a financial year exceeds Rs 50,00,000.

(If they are required to get Books of Accounts audited, TDS deduction is applicable as per Section 194C and 194J. The individual and/or HUF who have to deduct TDS under Section 194C (TDS on payment to a contractor) and 194J (TDS on payment on professional fees) do not have to deduct tax at source under Section 194M.)

7. Tax rate u/s 115JB (Minimum Alternate Tax) has been reduced from 18.5% to 15%.

8. Sec 54

Sec 54 (exemption from LTCG) has been extended for investment made, by way of purchase or construction, in two residential houses provided the amount of capital gains does not exceed Rs 2 crore. 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.

9. NAV of self- occupied property:

In scenario before Finance Act, 2019, if one had more than one property for self-occupation, then only one of those (as chosen by us), would be considered as self-occupied property for taxation purposes. The other self-occupied house property/properties would be considered as deemed to be let-out and the notional rent needs to be offered to tax. Now, the second house is to be treated as self-occupied and thereby has removed the necessity of paying tax on notional rent.

The interest deduction is limited to Rs 2 lakh for both the self-occupied house property in aggregate.

10. Sec 269SU:

Section 269SU requires every person who is carrying on business to provide the facility for accepting payments through prescribed electronic modes. These prescribed modes will be in addition to the facility for any other electronic mode of payment already provided to customers by such person.

Section 269SU is applicable to a person when the total sales, turnover or gross receipts from business exceeds Rs 50 crore during the immediately preceding previous year.

The Central Board of Direct Taxes (CBDT) has notified the prescribed modes of payment for the purpose of section 269SU:

  • Debit Card powered by RuPay
  • Unified Payments Interface (UPI) (BHIM-UPI)
  • Unified Payments Interface Quick Response Code (UPI QR Code) (BHIM-UPI QR Code)

11. Sec 46A of Income Tax Act has been deleted (buy-back by listed co.) & sec 115QA has been made applicable to all the companies.

12. Sec 139(1): Compulsory filing of return

Existing provision specify the filling of return if total income of the assessee being individual, 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 person deposited aggregate amount exceeding 1 Crore in one or more current accounts maintaining with baking company and co-operative bank.
  • A person incurred as aggregate amount exceeding 2,00,000/- for foreign traveling for himself or for any other person.
  • A person incurred expenditure on consumption of electricity for an aggregate amount of Rs. 1,00,000/-.

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Qualification: CA in Practice
Location: SILIGURI, West Bengal, IN
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