In Budget 2019 there are Numerous of changes related to Income tax , related to compliance part , additional burden of Tax by imposing super rich surcharges and , step taken by giving enhancing limit of exemption to boom and revive housing sector , Imposing TDS on Cash withdrawn to curb cash transaction, and encouraging E-Vehicle by giving rebate in Income tax ,giving relief to salary and pension Holder by enhancing standard deduction.
Changes made in Union Budget are following:
Currently a person is required to file Income tax return only when his income exceed maximum amount chargeable to income tax, but in Budget 2019, provision has been made to file income tax return even income is less income chargeable to income tax tax .with intention for Those who is having ability to incur large expenditure to ensure that they should not escape from paying tax and filling return.
it is proposed to amend section 139 of the Act so as to provide that a person shall be mandatorily required to file his return of income, if during the previous year, he-
(i) has deposited an amount or aggregate of the amounts exceeding one crore rupees in one or more current account maintained with a banking company or a co-operative bank; or
(ii) has incurred expenditure of an amount or aggregate of the amounts exceeding two lakh rupees for himself or any other person for travel to a foreign country; or
(iii) Has incurred expenditure of an amount or aggregate of the amounts exceeding one-lakh rupees towards consumption of electricity.
Read more at Section 139 of income tax act
a) TDS to be deducted on payment of more than 50 lakh to contractor and commission/brokerage agent and professionals in certain cases Section 194M has been inserted in Budget 2019, to provide deduction of TDS at the rate of 5% on the sums paid or aggregated of the sums, paid or credited on account contractual work or professional fees by an individual or a Hindu undivided family , not required to deduct TDS under section 194C and 194J of the income tax act, if such amount exceed fifty lakh Rupees in a year .
Individual and HUF required to deduct tax can deposit same using his PAN no and not required to apply and obtain pan No, applicable from 1st Sept 2019.
As before amendment there was no provision for deduction of tax on payment by Individual and HUF to Resident contractor and Professional, there was loopholes for tax evasions.
b) TDS on cash withdrawal from bank exceeding Rs. 1 crore to discourage cash transactions under section 194N:
The Finance Bill, 2019, said any bank or a co-operative society engaged in carrying on the business of banking; or post office, which is responsible for paying any sum, in cash, in excess of Rs one crore during the previous year, to any person from “an account” maintained by the recipient with it shall, at the time of payment of such sum, deduct an amount equal to 2 per cent of sum exceeding Rs 1 crore, as income-tax.
The Finance Bill amendment replaced “an account” to “one or more accounts”.
Amendments also clarified that the total TDS paid on cash withdrawal beyond Rs 1 crore will be adjusted against the total tax dues from the taxpayer and would not be constituted as income in hands of the taxpayer. This provision would come into effect from September 1, 2019.
a) As per existing section 194DA, a person is obliged to deduct tax at source at the rate of one percent, if it pays any sum to a resident under a Life Insurance Policy, which is not exempt under section 10(10D) .The TDS on the entire amount being paid by Insurance company without reducing the insurance paid as premium.
In Budget 2019 It has been proposed to provide tax deduction at source at the rate of 5 per cent on income component of the sum paid by the Insurance Company, Tds rate has been increased from from 1 per cent to 5 per cent, as it will be on net income and not on gross amount paid by the Insurance Company.
However, there will be no TDS in case the amount received from Insurance Company is exempt under section 10(10D). The amended provision of TDS rate of 5 per cent will apply with effect from 1st September, 2019.
b) Threshold for TDS u/s 194A increased to Rs. 40,000 from Rs. 10,000 for Bank, Co-operative bank and Post Office
After the amendment through Budget, Banks, Co-operative Bank and Post Office are not required to deduct any tax at source at the time of payment or credit of interest to the account of payee if the aggregate interest payable during the financial year does not exceed Rs. 40,000. Prior to the amendment the threshold was Rs. 10,000.
However this does not imply a rise in income tax exemption limit on interest income more than ten thousand. Interest income more than ten thousand continue will be taxable.
Benefit of increasing limit for TDS purpose is small depositor will not required to Deposit 15 G for TDS exemption and later on filling of income tax return for taking refund.
c) In case of purchase of immovable property, tax to be deducted on gross amount including incidental charges (section 194-IA), Applicable from 1st Sept 2019:
As per Section 194-IA, any person (buyer) who is responsible for making payment of sales consideration in respect of purchasing an immovable property shall deduct tax therefrom. Tax is deductible under this provision if amount of ‘consideration’ paid or payable for transfer of immovable property is Rs. 50 lakhs or more. In Budget 2019, Explanation has been proposed to be inserted in Section 194-IA to provide that the term ‘consideration for immovable property’ shall include all charges of the nature of club membership fee, car parking fee, electricity and water facility fees, maintenance fee, advance fee or any other charges of similar nature, which are incidental to transfer of the immovable property.
a) Additional Tax exemption for buying an affordable House , this deduction will be available over and above 2 lakh as per existing provision of section 24 under section 80EEA:
An individual can claim additional deduction of Rs 1.5 lakh on interest paid for Home loan under Newly introduced section 80 EEA on fulfilling following conditions :
i) Loan must have been taken between 1st April 2019 and 31st March 2020
ii) Value of House property should not exceed 45 lakh
iii) Individual should not be owner of any house on the date of sanction of loan.
b) Threshold limit for deduction of tax at source on rental income raised to Rs. 2,40,000 from Rs. 1,80,000 Under section 194-I:
After the amendment by Budget, threshold limit for deducting tax at source on rent payments to residents for use of land or building (including factory building) or any machinery or plant or equipment or furniture or fittings has been increased to Rs. 2,40,000 from Rs. 1,80,000.
c) Tax saving on LTCG from house property under section 54:
In Budget 2019 provision has been made to save long term capital gain on sale of house property , exemption on investment in two houses will be available .
This benefit is available only in case once in life time and capital gain should not be in excess of two crore .
d) Exemption of two self-occupied Houses for Notional Income under section 23(4) :
As per Amendment in Budget 2019, applicable from the assessment year 2020-21, Assesse will be eligible for exemption of notional rent up to two self-occupied- houses as against present oneself occupied House.
In case assesse is having more than two houses, then he is required to pay tax on notional rent, above all two self-occupied houses of his choice.
Standard deduction of Rs 40,000/ has been introduced in budget 2018 , after introduction of exemption for allowance of medical and Travel not available.
In current Finance bill 2019 has increase the limit of standard deduction by 10,000/ . It is now 50,000/ from Financial year 2019-2020.
In Budget 2019 , there is no changes in slab of income tax for individual , but surcharge has been enhanced to 25% from existing 15 % those who is having taxable income from two crore to 5 crore .
In case of assesse having taxable income more than five crore surcharge has been increased to thirty seven percentage from existing fifteen percent.
The Impact of this is maximum rate of tax would be increased from 35.88% for those having income more than two crore but less than 5 crore and 42.74% for those having income above 5 crore.
In Budget 2019, to encourage electric vehicle Government has announced to provided a deduction of interest up to 1.5 lakh on loan taken for purchase of electric vehicle from the AY 2020-2021.
However this benefit will be available to Individual assesse. vehicle can be purchase for his personal as well as Business use, provided vehicle is registered in name of owner or Business enterprise.
For getting benefit under section following criteria should be fulfilled
a) Loan must be taken from a financial institution,or non banking finance company for buying electric vehicle .
b) The Loan must be sanctioned anytime during the period from 1st April 2019 till 31st March 2023.