Interim Budget 2019-20 is presented by Interim Finance Minister, Piyush Goyal.

Here are some key highlights of changes in Direct tax: –

No amendments in Income tax slab and Surcharge rates

1. The existing rate of Income tax will continue. Here is brief introduction of different rates of income tax for different entities:

(i) Slab rate for Individual/HUF/AOP/BOI/Non- resident:

Income range Income tax rate
Upto Rs. 2,50,000 Nil
Rs. 2,50,000 to Rs. 5,00,000 5%
Rs. 5,00,000 to Rs. 10,00,000 20%
Above Rs. 10,00,000 30%

(ii) Slab rate for resident senior citizen (who is the age of 60 years or more but less than 80 years)

Income range Income tax rate
Upto Rs. 3,00,000 Nil
Rs. 3,00,000 to Rs. 5,00,000 5%
Rs. 5,00,000 to Rs. 10,00,000 20%
Above Rs. 10,00,000 30%

(iii) Slab rate for resident super senior citizen (who is the age of 80 years or more)

Income range Income tax rate
Upto Rs. 5,00,000 Nil
Rs. 5,00,000 to Rs. 10,00,000 20%
Above Rs. 10,00,000 30%

(iv) For others

Firm 30%
Domestic Company (if turnover in previous year 2016-17 is upto Rs. 250 crore) 25%
Domestic Company (if turnover in previous year 2016-17 exceeds Rs. 250 crore) 30%
Foreign Company (some specified transactions with Government) 50%
Other Foreign Company 40%

2. There is no change in surcharge as well. Here is detail of surcharge applicable on each entity:

 

Particulars Rate of Surcharge
Exceeds Rs.50 lakh to 1 crore Exceeds Rs. 1 crore to 10 crore Exceeding Rs. 10 crore
Individual/HUF/AOP/BOI 10% 15% 15%
Firm Nil 12% 12%
Domestic Company Nil 7% 12%
Foreign Company Nil 2% 5%

Amendments proposed in Finance Bill, 2019

Section of Income tax Act,1961 Present Law Amendment proposed in Finance Bill, 2019 Applicable with effect from
Section 16 Under Income chargeable under the head salaries, there is standard deduction of Rs. 40,000 in lieu of transport allowance and medical reimbursement of Rs.15,000 or the amount of salary, whichever is less. Standard deduction of Rs.40,000 is increased to Rs.50,000. 01.04.2020
Section 23 If there is more than one self-occupied property, the annual value of one house property is taken to be Nil and the other property is deemed to be let out. There is no notional tax on two self-occupied properties 01.04.2020
Section 54 There is exemption on capital gains in case all following conditions are satisfied:

1. The property is residential house property

2. The property is transferred by any Individual or HUF

3. The gain arises from transfer of property is long term capital asset

4. A new house property is purchased within a period of one year before transfer or within two year after the date of transfer

5. A house property is constructed within a period of 3 years from the date of transfer

If capital gain does not exceed two crore rupees, an assessee can purchase or construct two residential house. Earlier the exemption on capital gain was available only for one house property. However, this exemption can be availed only once in a life time. 01.04.2020
Section 80-IBA There is 100% Deduction in respect of profits derived from housing projects, if following conditions are satisfied:

1. The project is approved by competent authority after 01st day of June 2016 but on or before 31st day of March 2019

2. The project is completed within a period of 5 years from the date of approval

3. Other condition relates to location, size of project etc.

If the project is approved before 31st day of March 2020, then also deduction is available.

In other words, to make homes available under affordable housing, the benefit is extended for one more year.

01.04.2020
Section 87A If the total income of an individual resident does not exceed Rs. 3,50,000, there is deduction of Rs. 2500 or 100% of Income tax whichever is less. Now, if income does not exceed Rs.5,00,000, there is deduction of Rs. 12,500 or 100% of Income tax whichever is less. Therefore, if taxable annual income of an assessee is upto Rs.5,00,000, he shall not pay any tax but if Income exceeds Rs.5,00,000 then slab rate shall be applicable. 01.04.2020
Section 194A If any income is credited to an Individual or HUF by way of Interest other than interest on securities, tax is to be deducted @ 10%.

However, no tax is to be deducted if:

1. Income does not exceed Rs. 10,000 where interest is paid by any banking company, co-operative society engaged in banking business, post office.

2. Income does not exceed Rs. 5,000 in any other case.

The exemption limit is now increased from Rs.10,000 to Rs.40,000, if interest is credited by banking company or post office. However, if interest is credited by any other, the limit is Rs.5,000 only. 01.04.2019
Section 194-I If rent is payable by any person exceeding Rs. 1,80,000, tax is to be deducted @ 2% if plant or machinery is being given on rent and 10% if land, building or furniture is being given on rent  The limit is increased from Rs.1,80,000 to Rs.2,40,000 01.04.2019

 (Author can be reached on info@samastadvisory.com)

Author Bio

Qualification: CA in Job / Business
Company: Samast Advisory Private Limited
Location: Delhi, New Delhi, IN
Member Since: 05 Feb 2019 | Total Posts: 1

More Under Income Tax

8 Comments

  1. sunil yadav says:

    There some confusion in applicability about changes in section 87A and standard deduction in financial bill 2019. It may be effect w.e.f.01.04.2019 but in your article it shows 01.04.2020. It is true or false?

Leave a Comment

Your email address will not be published. Required fields are marked *