Budget-2019 Change in Direct Tax

Highlights of the Income Tax provisions made in Budget 2019

Income tax provisions

The Finance Minister Nirmala Sitharaman had made her maiden budget of the Modi 2.0 Government in the Lok Sabha on July 5, 2019, in the Parliament.

Finance minister Nirmala Sitharaman in her budget kept the income tax slab rates unchanged, however, announced new income tax proposals that may have an impact on many taxpayers. Also, no changes were made in the income tax slabs or rates apart from the increase in a surcharge for those earning between Rs. 2 crores to Rs 5 crore. Also, TDS has been imposed on cash withdrawals but that would not hurt the common man as it is only for high-value annual withdrawals.

Highlights of the Income Tax provisions made in Budget 2019

The government had announced that;

Aadhaar and PAN would be made interchangeable for tax-filing purpose. This means that if an individual doesn’t have a PAN, still that individual could file returns using Aadhaar.

Additional deduction of Rs. 1 lakh on interest paid for an affordable house of Rs. 45 lakh, borrowed on or before March 31, 2020

The interest paid on home loan deduction would go up to Rs.3.5 lakh, from the current Rs. 2 lakh for self-occupied house property.

After interest deduction, affordable home buyers would gain tax benefit of Rs. 7 lakh over the period of the interest deduction.

Also, 2% TDS on cash withdrawal on the amount exceeding Rs.1 crore in a year has been announced, under a new section 194N.

The government also increased income tax surcharge for HNIs (high net worth individuals) earnings more than Rs. 2 crores a year. The surcharge for people having taxable income from Rs 2 crores to Rs 5 crores increased to 25% from 15% in the FY 2019-20. The surcharge for people having taxable income from Rs 5 crores to Rs 10 crores increased to 37%, from the current 15% in the FY 2019-20.

Faceless and anonymous assessment system for income tax being rolled out this year in phases

Proposal to give relief in levy of securities transaction tax

Corporate tax worth 25% that is applicable to companies with an annual turnover Rs. 250 crore will be applicable to the ones with an annual turnover of Rs. 400 crore

Section 35AD deduction extended to Li-On battery, Semi-conductor, Laptops, Fabrication, and Photovoltaic cell.

Also Rs. 1.5 lakh income tax deduction on interest paid on loans for the purchase of electric vehicles has been announced

Retail investors in CPSE (central public sector enterprises) ETFs could get ELSS-like income tax benefits, as per the Budget proposals. The government had set an Rs.1.05 lakh crore divestment target this year. Currently, investments made in ELSS (equity-linked savings scheme) mutual funds, which come with a lock-in period of 3 years, are eligible for a tax deduction of up to Rs.1.50 lakh under Section 80C of the Income Tax Act.

Also, to provide an impetus to affordable housing scheme, additional relief of Rs. 1.5 Lakh per year has been provided to first-time homeowners

The government proposed that individuals who enter into certain high-value transactions have to mandatorily file their tax returns even if their taxable limit is less than Rs. 2.5 lakh. The transactions consist of depositing an amount exceeding Rs.1 crore one or more current accounts; has incurred an expenditure of more than Rs. 2 lakh for himself or any other individual for travel to a foreign country; or has incurred an expenditure of an amount or aggregate of the amounts exceeding Rs.1 lakh towards consumption of electricity.

Author:

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Budget 2019 Direct tax

Highlights of the Income Tax provisions made in Budget 2019

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Budget 2019 Direct tax

Highlights of the Income Tax provisions made in Budget 2019

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