key highlight _union Budget II 2019 - Income Tax

[Sandeep Rawat]

key highlight _union Budget II 2019 - Income Tax

1. The threshold limit for reduced tax rate of 25% in case of domestic companies has been increased from ₹ 250 crores to ₹ 400 crores. Thus, a domestic company whose total turnover or the gross receipt in the previous year 2017-2018 does not exceed ₹ 400 crore shall be taxable at the rate of 25%.

2. A new Section 80EEA has been inserted to provide for deduction of up to ₹ 1.50 lakhs for interest on loan taken from any financial institution for acquisition of a residential house property whose stamp duty value does not exceed ₹ 45 lakhs.

3. A new section 80EEB has been inserted to provide for a deduction of ₹ 1.5 lakhs in respect of interest on loan taken for purchase of an electric vehicle from any financial institution.

4. The new rate of surcharge for Individual, HUF, AOP, BOI and AJP shall be - 10% (for income of ₹ 50 lakhs to ₹ 1 crore), 15% (for income of ₹ 1 crore to ₹ 2 crores), 25% (for income of ₹ 2 crores to ₹ 5 crores) and 37% (for income exceeding 5 crores).

5. Any sum of money paid, or any property situated in India transferred, on or after July 5, 2019 by a person resident in India to a person outside India shall be deemed to accrue or arise in India under Section 9.

6. Furnishing of return of income shall be mandatory under Section 139 if an individual has deposited ₹ 1 crore or more in current account or he has incurred expenditure of ₹ 2 lakhs or more on foreign travel or he has incurred expenditure of ₹ 1 lakh or more on electricity consumption.

7. Income-tax return can be filed using Aadhaar Number, if person hasn't been allotted PAN. If a person has linked his Aadhaar number with PAN, he may also furnish his Aadhaar number in place of PAN in the Income-tax return.

8. PAN allotted to a person shall be deemed to be invalid, if he failed to intimate the Aadhaar to the Dept.

9. A new Section 194N has been inserted to require deduction of tax at source at the rate of 2% if aggregate of cash withdrawn during the financial year from any account maintained with a banking company or cooperative bank or post office exceeds ₹ 1 crore.

10.  The sunset date for transfer of residential house property, for claiming exemption under Section 54GB in respect of investment made in eligible start-ups, has been extended from 31st March, 2019 to 31st March, 2021. Further, the conditions of minimum shareholding or voting rights has been relaxed from 50% to 25%.

11.  Application under Section 195(2) and 195(7) for lower or nil deduction of tax from sum paid or payable to non-residents person can be filed electronically.

12.  A new Section 194M has been inserted to require any individual or HUF (who is not required to deduct tax under Section 194C or 194J) to deduct tax at source from sum paid to a contractor or professional if aggregate payment during the year exceeds ₹ 50 lakh. The tax can be deposited under this provision without any requirement to obtain TAN.

13.  As per Section 194-IA, a buyer is required to deduct tax at source from the consideration paid to buy an immovable property. An explanation has been inserted that 'consideration for immovable property' shall include all charges paid towards club membership fee, car parking fee, electricity and water facility fees, maintenance fee, or any other charges of similar nature, which are incidental to transfer of the immovable property.

14. In case of failure to file an Income-tax return, the prosecution proceedings are initiated under Section 276CC if the tax payable by the assessee is ₹ 3,000 or more. This threshold limit has been increased to ₹ 10,000.

15. Constituent entity of an International group shall now be required to keep and maintain information and document under Section 92D and file required form even when there is no international transaction is undertaken by such constituent entity.

16. There are various provisions in the Act which requires a person to make payment by account payee cheque/draft or ECS. In order to encourage other electronic modes of payment, the Government has proposed to amend relevant provisions to include other electronic modes of payment.

17.  Tax shall be deductible under Section 194DA at the rate of 5% only on the income component of life insurance pay-out. The existing rate of TDS was 1% on the gross amount.

18.  Relief under Section 89 shall be considered while computing the tax liability under Section 140A, section 143, section 234A, section 234B, and section 234C to avoid genuine hardships to the taxpayers who are claiming such relief.

19.  Every person, carrying on business, shall, provide facility for accepting payment through electronic modes if his turnover or gross receipts exceeds ₹ 50 crores. The Payment and Settlement Systems Act, 2007 is proposed to be amended to provide that no bank or system provider shall impose any charge upon anyone, either directly or indirectly, for using the electronic modes of payment.

20.  A taxpayer has been allowed to withdraw 60% of total amount from NPS as tax free. Currently, the exemption is allowed only up to 40% of the total corpus amount.

21.  Benefit of first proviso of Section 201(1) has been extended in case of failure to deduct tax at source from sum paid to non-residents. Thus, a deductor shall not be deemed to be an assessee in default even if he fails to deduct tax from sum paid to a non-resident, if such non-resident discloses such income in his return of income and pays tax due on such income and a certificate from a Chartered Accountant is furnished to this effect.

22.  Deduction of up to 10% of salary is allowed under Section 80CCD in respect of contribution made by an employer to NPS. The limit has been proposed to be increased to 14% of salary in case of Central Government's employees.

23.  Section 12AA has been amended to provide that at the time of granting of registration to a trust or institution the Pr. CIT or CIT shall also satisfy himself that the applicant trust or institution also satisfy the requirements of any other law which is material for the purpose of achieving its objects.

24.  The Pr. CIT or CIT has been empowered to cancel the registration under Section 12AA, if after granting registration it has been noticed that the trust or institution has violated requirements of any other law which was material for the purpose of achieving its objects.

25.  Section 115QA which requires payment tax on distributed income in case of buy-back of shares has proposed to be extended to listed companies as well.

26.  ITR filing is mandatory, if total income of assessee before claiming the benefit of capital gain exemption under sections 54, 54B, 54EC, 54F, 54G, 54GA and 54GB, doesn't exceeds the maximum amount not chargeable to tax.

For further clarification and professional assistance, feel free to contact at  [email protected]

(Mr. Sandeep Rawat has vast experience & knowledge in dealing with Direct and Indirect Taxation.  He is Co-founder and Managing Partner at SRT Consultancy & Co. "SRTC".