Finance Bill, 2019 – Analyses of Key Changes Proposed
-As per the Income Tax Return Statistics available from the CBDT portal for the AY 2017-18, around 4.99 crore Income tax returns were filed out of the total population of 130 crores (approx.), which is roughly 3.84% only.
-Further, if we analyse the income tax returns statistics out of 4.99 crores of returns filed, 4.67 crore returns were filed by the individuals, which is roughly 93% of the total returns filed. Hence, the importance of Budget becomes a key area for Individuals, who are keen to know what the budget has for them?
-Also, corporates operating in the economy have expectations from the view point of some tax reliefs.
With the same motive, I have analysed the key changes proposed by the Finance Bill, 2019 presented by our Hon’ble Finance Minister on July 5, 2019.
Moving ahead with the impact, the finance bill has highlighted the government’s efforts for accomplishment of a BEHTAR INDIA.
A. In case of INDIVIDUALS
1. Firstly, the most awaited expectations of the public at large, the Income Tax Slab Rates. Unfortunately, No revision in tax slab rates has been proposed. Hence, the old slab prevails.
On the other hand, government has also proposed to enhance surcharge on taxable income of Rs. 2 to 5 cr.
Basically for individuals, the bifurcation of slab rate is on the basis of age group and income earned. The importance here to be given, is to the impact of rebate under section 87A. The section 87A, allows rebate on the amount of tax to an individual assessee whose net income after considering the deductions is upto Rs. 5,00,000 (on the amount of the tax calculated after considering the deductions, i.e., net income after deductions). For an instance, if the income of an individual is Rs. 5,50,000 and the same individual has claimed deduction of Rs. 1,50,000. Net income of that individual will be Rs. 4,00,000 on which tax of Rs. 7,500 is to be paid. But, section 87A allows individual to claim rebate on tax amount upto the net income upto Rs. 5,00,000. Hence, in the given instance amount of tax payable will be NIL [Tax amount (Rs. 7,500) Less Rebate u/s 87A (Rs. 7,500)].
2. Crucial Change Proposed – Interchangeability of PAN and Aadhaar Card
The biggest reform which can be seen is Interchangeability of PAN and Aadhaar Card. It has been proposed that, the assessee can quote the Aadhar Card no in the income tax return, If the assessee do not have PAN, they have an option to quote Aadhar card in place of PAN. In the same case, PAN will be allotted by the government directly.
This proposal clearly indicates the importance being given to the Aadhar Card. Days are not far, where government will come with a quote one person one identity and that will be Aadhar Card.
B. In case of COMPANIES
It has been proposed that in case of company whose annual turnover is Rs. 400 crore, the tax rate applicable will be 25% and for the remaining companies tax rate will be 30%. As compares to the previous period, the turnover criteria has been enhanced from Rs. 250 crores to Rs. 400 crores, there by providing a big relief to the companies.
Government has further stated that, this initiative has lead to cover 99.3 % companies registered with MCA.
C. Changes proposed by Government for building a BEHTAR INDIA
Discussing about the changes proposed by government for development of economy, then we will discuss broadly 3 areas :
1. Digital and Cash less Economy
With a motive to promote a digital and cashless economy government is making every possible attempts. With the same motive to promote digital transactions, it has been proposed to remove charges for transactions made through Digital modes of payment.
Not only that, it has also been proposed to deduct TDS of 2% on cash withdrawal exceeding Rs. 1 cr. from a Bank account per year.
2. Green Environment
With an motive to promote the green environment and to boost up the sales of electric vehicles, government has proposed to reduce the GST rates on purchase from 12% to 5%. Further, tax deduction will also be available on loan taken for purchase of electric vehicle, i.e., Additional Income tax deduction of Rs. 1.5 lakh of interest on loan taken for purchase of electric vehicle will be allowed as deduction.
3. Building Infrastructure
The most important and crucial objective of government is development of infrastructure. Under the said objective, government has came up with an Additional deduction of Rs. 1.5 lakh for interest on loans borrowed for housing. The same may be with an intention to promote SABKA GHAR. This can be viewed as a biggest advantage for the home owners who have borrowed fund for building the house. The home owners can claim upto Rs. 3.5 lakhs as deduction on their home loan interest (as previously deduction upto Rs. 2 lakh was allowed).
So, the key take always from the finance bill is – Government is working in full motion to achieve a BEHTAR INDIA.