On 5th July evening, I was busy to understand Budget 2019 and its impact on Tax.
“There will be no use of PAN card! Is it true?”
One of my clients asked me.
Believe me, I was ready for that particular question.
“No. Not like that”. I replied.
He looked at me. There was a lot of question on his eyes.
I said, ” Do you want to know the key points of the budget related to tax”?
So, here I want to give a brief idea about Budget 2019 and important points related to tax.
- 1 # Budget 2019: Interchangeability of PAN card and AADHAAR card
- 2 # Budget 2019: More Tax for Super Rich
- 3 # Budget 2019: Introduction of New Section 80EEA for Home Loan
- 4 # Budget 2019: Mandatory Income Tax Return filing
- 5 # Budget 2019: Income Tax exemption on the purchase of the electric vehicle
- 6 # Budget 2019: Section 194M, TDS on payment to Professionals/Contractors.
- 7 # Budget 2019: TDS on Cash Withdrawl
- 8 # Budget 2019: Pre-filling of Income Tax Return
- 9 # Budget 2019: Faceless Assessment
- 10 # Budget 2019: TDS on Immovable Property.
- 11 # Budget 2019: Quoting of PAN/AADHAAR
- 12 # Budget 2019: Linking AADHAAR with PAN
- 13 # Budget 2019: Digital Payment and less Cash Transaction.
- 14 # Budget 2019: Changes in GST.
- 15 # Budget 2019: Changes in Corporate Tax Turnover Limit.
- 16 # Budget 2019: No Changes in Slab rate. Rebate up to Rs. 5 Lakhs.
- 17 # Budget 2019: Final Word
# Budget 2019: Interchangeability of PAN card and AADHAAR card
“More than 120 crore Indians now have Aadhaar card, therefore for ease of taxpayers I propose to make PAN and Aadhar interchangeable and allow those who don’t have PAN to file returns by simply quoting Aadhaar number and use it wherever they require to use PAN“ —– Finance Minister Nirmala Sitaraman.
Please read carefully the particular line “those who don’t have a PAN to file returns…….”.
It does not mean that there will be no further use of PAN in the future.
If you have no PAN, in that case, you can submit your AADHAAR number.
Again, I want to point out another line “use it wherever they require to use PAN”.
Therefore in the following cases also you can use your AADHAAR in case you have no PAN:
- Cash transaction for more than Rs. 50000.
- File your ITR.
- Pay your Income Tax.
- Investment in Mutual Fund
- and so many areas where PAN is used.
But if you have your PAN then you have to use it. All the above will be materialized in case if you have no PAN in your name.
# Budget 2019: More Tax for Super Rich
If you are a super-rich person then your tax burden will be high.
The rate of surcharge increases for super-rich persons.
The proposed surcharge rate is as follows:
- If the taxable income of an individual is more than Rs. 2 Crore but not more than Rs. 5 Crore, then the rate will be 25%.
- If the taxable income is more Rs. 5 Crore, then the rate is 37%.
- At present, the rate is 15% for the aforesaid limit.
So, you can see there is a huge increase in the surcharge.
# Budget 2019: Introduction of New Section 80EEA for Home Loan
At present the allowed deduction for a home loan is Rs. 200000 under section 24(b) of the Income Tax Act,1961.
However, after the introduction of a new section 80EEA, you are eligible for an additional deduction of Rs. 150000. Therefore your total deduction for home loan purpose is Rs. 350000.
Many market experts think that this particular step will help to increase the real estate business.
However, there are certain conditions to avail this deduction facility and they are:
- It is available only to Individual.
- The amount of deduction Rs. 150000 is over and above the deduction limit u/s 24(b).
- The value of the house property must be not more than Rs. 45 Lakhs. Here value means stamp duty value.
- The home loan must be acquired by you during the period from 1st April 2019 to 31st March 2020.
- If you have a home loan and it was taken before 1st April 2019 then you are not eligible for this additional deduction.
- It must be remembered that you do not have any residential house property on the date of sanctioning the loan.
Hence, if you want the full deduction of Rs. 350000, you have to satisfy the conditions of both sections i.e. Section 24 and Section 80EEA.
Do you want to know about Section 24? Click here.
# Budget 2019: Mandatory Income Tax Return filing
As you know, mandatory income tax return filing is applicable only to the Company or a Firm. Except these all other assessee have to file IT return if the total income exceeds the minimum threshold limit.
However, there is also some exception like
- If you want to refund then you have to file IT return. It does not matter whether your total income is more than the threshold limit or not.
- For carry forward of loss, etc.
But now you have to file your ITR on the basis of the high-value transaction. This means if you have incurred some specified high-value transaction during the previous year then you have to file your ITR. No matter your total income is less than the threshold limit or not.
The transactions are as follows:
- Deposit more than Rs. 1 Crore in one or more current account maintained with a bank or a Co-operative bank.
- Expenditure on foreign travel for more than Rs. 2 Lakhs for yourself or for any other person.
- Expenditure of more than Rs. 1 Lakh for electricity bill consumption.
- If you want to take exemption under section 54, 54B, 54F, etc. i.e. exemption from long term capital gain on sale of property you have to file your return if before claiming the exemption the income is more than the minimum threshold limit.
It is a big move by the Govt.
# Budget 2019: Income Tax exemption on the purchase of the electric vehicle
“Considering our large consumer base, we aim to leapfrog and envision India as a global hub of manufacturing of Electric Vehicles. Inclusion of Solar storage batteries and charging infrastructure in the above scheme will boost our efforts. Government has already moved GST council to lower the GST rate on electric vehicles from 12%to5%. Also to make electric vehicle affordable to consumers, our government will provide additional income tax deduction of 1.5 lakh on the interest paid on loans taken to purchase electric vehicles. This amounts to a benefit of around 2.5 lakh over the loan period to the taxpayers who take loans to purchase electric vehicle.” _____________ Finance Minister Nirmala Sitaraman
From the above speech, it is very clear that the Govt. wants to promote electric vehicle to promote a good eco-friendly system in India. For this purpose, there is a proposal of additional tax deduction of Rs 150000 under section 80EEB. However, the following conditions must be satisfied:
- The deduction will be given on interest on loan taken for purchase electrical vehicle.
- The loan must be taken between 1st April 2019 to 31st March 2023.
- The person who wants to take the benefit, must not have any electric vehicle at the time of taking the loan i.e., the first-time buyer.
# Budget 2019: Section 194M, TDS on payment to Professionals/Contractors.
At present, there is no requirement to deduct tax at source by an individual or HUF in case of any payment made for personal use to any professional or any contractor.
Again, it may also happen that an individual or a HUF is engaged in any business or profession and there is no requirement of an audit. In that case, there is no need to deduct tax at source.
Now, there is a new section 194M for TDS purpose. According to this section if there is a payment to professionals/contractors for more than Rs. 50 lakhs then there will be a TDS of 5% on such amount. It does not matter that your business is liable to audit or not or the payment is made for personal use or business use.
This provision will be effective from 1st September 2019.
Again, an individual or a HUF can deposit such TDS by using their PAN. No Tax Deduction Account Number (TAN) is required.
# Budget 2019: TDS on Cash Withdrawl
“To discourage the practice of making business payments in cash, I propose to levy TDS of 2% on cash withdrawal exceeding 1 crore in a year from a bank account.” __________ Finance Minister Nirmala Sitaraman.
Cashless payment, it is one of the most important agenda of our GOVT. To promote this further, a new proposal is taken. If there is cash withdrawal exceeding Rs. 1 crore in a year from a bank account, co-operative bank, any banking company, etc then 2% TDS will be levied.
No matter withdrawal is one time or throughout the year.
Therefore, if you withdraw Rs. 1 crore in 4 parts throughout the year, 2% TDS will be levied.
# Budget 2019: Pre-filling of Income Tax Return
According to the Budget 2019, pre-filled Income Tax Return will be available to the customer. It includes the following:
- Details of Salary Income.
- Capital Gains from Securities.
- Bank Interest and dividend, etc.
The information regarding the above income will be collected from the following sources:
- Stock Exchange,
- Mutual Funds,
- State Registration Department, etc.
It is really a very good step because it will reduce the time taken for filing the income tax return.
However, you can’t follow blindly all the pre-filled information. You have to check everything before filing.
# Budget 2019: Faceless Assessment
“The existing system of scrutiny assessments in the Income-tax Department involves a high level of personal interaction between the taxpayer and the Department, which leads to certain undesirable practices on the part of tax officials.” __________ Finance Minister Nirmala Sitaraman.
To eliminate this kind of problem a new scheme “Faceless Income Tax Assessment” will be launched this year. It will reduce personal interaction between the taxpayers and the officials. It is completely an electronic process. and it is launched in a phased manner.
At first, such e-assessment shall be carried out for the purpose of verification of certain transaction or discrepancies. The cases for scrutiny should be selected and allocated in a random manner. The notices shall be issued electronically by a central cell, without disclosing the name, designation and/or location of the assessing officer.
It is really a very big move. As per our Finance Minister, this move is launched to give shape to the vision of the Hon’ble Prime Minister.
This move will help to reduce malpractice and also help to create trust in the department.
# Budget 2019: TDS on Immovable Property.
According to the provisions of section 194-IA of the Income Tax Act 1961, a buyer of immovable property is liable to deduct TDS @ 1% if the value of such immovable property is more than Rs. 50 Lakhs.
From 1st September 2019, the value of consideration shall include other charges such as:
- Club Membership Fee.
- Car Parking Fee.
- Electricity and Water Facility Fee.
- Maintenance Fee.
- Advance Fee of any other charges of similar nature
- which are incidental to the purchase of the immovable property.
At present, the above charges are not included at the time of calculating the amount of TDS.
# Budget 2019: Quoting of PAN/AADHAAR
In order to track the certain high-value transaction, quoting and authentication of PAN/AADHAAR is mandatory for some prescribed transaction.
The person who will receive the documents shall ensure correct quoting and authentication of PAN/AADHAAR.
For this purpose, the penal provision related to this is also proposed to amend.
# Budget 2019: Linking AADHAAR with PAN
Your PAN will be invalid if it is not linked with AADHAAR within the prescribed date i.e. 30th September 2019. If a person fails to provide the AADHAAR number, his/her PAN shall be inoperative after the above-mentioned date.
# Budget 2019: Digital Payment and less Cash Transaction.
It is already mentioned that there will be 2% TDS on cash withdrawal exceeding Rs.1 crore in a year from a bank account.
It is very clear that the Govt. is very much concerned about to ensure less cash transaction. For this purpose the following steps shall be taken:
- Business with an annual turnover of more than Rs. 50 crore shall provide a low-cost digital mode of payment to its customer.
- There will be no charges or discount rate on merchant as well as customers.
- There is a various low-cost digital mode of payment such as BHIM UPI, UPI-QR Code, Aadhaar Pay, NEFT, RTGS, etc. This all can be promoted to ensure less cash transaction.
# Budget 2019: Changes in GST.
The following steps are taken in order to ensure good GST practice:
- A taxpayer who has an annual turnover of less than Rs. 5 crores shall file quarterly return.
- Free Accounting Software for return preparation is already available in the portal for small business.
- A fully automated GST refund module shall be implemented.
- An electronic invoice system will introduce where invoice details will capture at the time of issuance. It will be very helpful to ensure a pre-filled return. There will be no need for a separate e-way bill. However, for this, we have to wait up to January 2020.
# Budget 2019: Changes in Corporate Tax Turnover Limit.
At present, the lower rate of Corporate Tax is 25%. It is applicable to the company with an annual turnover up to Rs. 250 Crore.
Now there is a proposal to increase this limit to Rs. 400 crore.
This will cover 99.3% of the companies. Only 0.7% of Companies will pay a higher rate of Tax.
# Budget 2019: No Changes in Slab rate. Rebate up to Rs. 5 Lakhs.
There are no changes in the slab rate.
However, there is a change in the rebate amount.
Earlier it was Rs. 350000 and the allowed deduction was Rs. 2500. As per Budget 2019, the limit will be Rs. 500000 and the amount of permissible deduction will be Rs. 12500.
Therefore, no tax will be levied up to the total income of Rs. 5 Lakhs.
# Budget 2019: Final Word
I hope you have a very clear idea about the highlights and key points related to taxes.
Now, every provision is proposed. After implementation and taking necessary actions on it, we can see the result.
If you any queries about the topic feel free to ask me.
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Ok. Goodby. Ta-Da.