Union Budget 2019: Quick Insight on Direct Tax Proposals

Direct Tax Proposal – Quick Insight [Budget for clean environment, technology advancement, low cost housing and less cash economy]

Brief presentation dealing with following subject areas proposed in Budget.

i)  Tax Rate

ii) Electric vehicle [Section 80EEB]

iii) Affordable Housing [Section 80-IBA & Section 80EEA]

iv) Start-ups

v) Tax deducted at source

vi) Income Tax Return

Direct Tax Proposal – Quick Insight

Budget for clean environment, technology advancement, low cost housing and less cash economy

Tax Rate:

1) Threshold limit for lower corporate tax of 25% has been increased from Rs. 250 crores to Rs. 400 crores.

Domestic companies (turnover / gross receipts) of the previous year 2017-18 not exceeding 400 crores will be taxable @ 25% (+SC+HEC) for the assessment year 2020-21

2) Surcharge has been increased for Individual, HUF, AOP & BOI having income between Rs 2 crores to 5 crores to 25% of Income tax and income above Rs.5 crores to 37% of Income tax.

Electric vehicle [Section 80EEB]

1) Income tax deduction of Rs 1.5 lakh on the interest paid on loans taken to purchase electric vehicles.

Conditions:

i) Applicable to individual assessee only

ii) Loan should be sanctioned between 01.04.2019 to 31.03.2023

Affordable Housing [Section 80-IBA & Section 80EEA]

Section 80-IBA:

i) 100% of deduction under section 80-IBA for all those assessee whose GTI includes profit and gain derived from the business of developing and building housing projects with fulfilling conditions prescribed.

ii) This tax holiday has been extended to 31^st March 2020 in interim budget 2019-20.

Section 80EEA:

i) Interest on housing loan for purchase of affordable house will be deducted up to 1.50 lakh under newly inserted section 80EEA.

ii) This deduction is in addition to existing deduction of Rs 2.0 lakh

iii) Loan should be sanctioned during 01^st Apr 2019 to 31^st Mar 2020

iv) Stamp duty value of house doesn’t exceed 45 lakh rupees

v) Assessee doesn’t own any residential house property on the date of sanction of loan

Start-ups

i) Angel Tax :

To resolve issues of ‘angel tax’ start-ups and their investors who file requisite decorations and provide information in their returns will not be subjected to any kind of scrutiny in respect of valuations of share premiums.

ii) Special administrative arrangements by CBDT for pending assessments of Start-ups.

iii) No inquiry or verification by AO without obtaining prior approval of his supervisory officer

iv) No justification of FMV for category-II Alternative investment fund in addition to at present category-1 Alternative investment fund.

v) Extension of sun set date of transfer of residential property for investment in eligible start-ups from 31^st March 2019 to 31^st March 2021 with minimum shareholding of 25% & restriction on transfer of new assets to 3 years.

vi) Several other measures like streamline of labour laws, education, promotion of digital trail based payment mode will also benefit to start-ups.

Tax deducted at source:

Section 194N:

Requirement to deduct TDS @ 2% by banking company, co-operative bank or post office if aggregate of cash withdrawn by a person during the financial year exceeds Rs. 1 Crore.

Section 194M:

It has been inserted to require any individual / HUF (who is not required to deduct tax under section 194C / 194J) to deduct tax @5% from sum paid to contractor or professional if aggregate payment during the year exceeds Rs. 50 lakh.

Section 194-IA:

Thresh hold limit of Rs. 50 lakh shall be calculated by including all charges paid towards club membership fees, car parking fees, electricity and water facility fees, maintenance fees or any other charges of similar nature, which are incidental to transfer of an immovable property.

Income Tax Return:

i) Income tax return can be filled using Aadhar number, if person has not been allotted PAN. ITD shall allot PAN to such person after obtaining demographic data from the UIDAI.

ii) Compulsory filling of return under section 139, who during the previous year

– has deposited an amount aggregate of the amounts exceeding one crore rupees in one or more current account

– has incurred an aggregate expenditure exceeding 2 lakh rupees for foreign travel

– has incurred an aggregate expenditure exceeding 1 lakh rupees towards consumption of electricity bill

– have claim of rollover benefit of capital gain under section 54, 54B, 54D, 54EC, 54F , 54GA and 54GB and whose income becomes lower than maximum amount not chargeable to tax .

iii) Prefilled ITR will be made available to assessee having income of salary. Capital gain & income from other sources.