The General Elections delayed the presentation of the Union Budget for Financial Year 2019-20. The Finance Minister Ms. Nirmala Sitharaman presented her first Budget in July, 2019 and the changes arising in furtherance of the Budget have come into effect since September 1, 2019. This article discusses some of the key changes in the Income Tax laws.
1. Tax Deducted at Source (‘TDS’) on additional payments towards purchase of immovable property
For the purpose of computation and deduction of TDS while making the payment towards immovable property, an assessee is now required to include charges towards:
• club membership fees,
• maintenance fees,
• parking fees,
• electricity and water facility fees, and
• charges towards other amenities and services
Earlier the payments made towards the above-mentioned amenities and services were not included in the total consideration for the purpose of computation and deduction of TDS.
2.Banks and financial institutions can be asked to report even small transactions
The Central Government can now direct the banks and financial institutions to report any kind of transaction which may be useful for verifications of returns filed by an assessee.
Earlier transactions exceeding INR 50,000 were required to be reported to the government.
3.TDS on cash withdrawal from bank accounts
As an another attempt in the direction of promoting a cashless economy, total cash withdrawals exceeding INR 1 crore during a financial year from bank accounts, shall entail a TDS obligation of 2%.
4.TDS on payments made by individuals and HUFs to contractors and professionals
In case the total payments made by individuals/ HUFs to contractors and professionals in a financial year are in excess of INR 50 lakhs, the same will now be subject to TDS at the rate of 5%.
Earlier, no such requirement of TDS existed when such payments were made for personal use or if the concerned individual/ HUF was not subject to audit for its business/ profession.
5.TDS on life insurance
In case the life insurance maturity proceeds obtained by an assessee are subject to tax, the same shall now be subject to TDS at the rate of 5% on the net income portion.
Net income portion = (Total amount received) – (Total amount of insurance premium paid)
6.PAN to become inoperative if not linked with Aadhaar
The non-linking of PAN with Aadhaar by the deadline specified by the Government will not leave the PAN to be invalid but will however, render it inoperative. This will help in protecting the validity of transactions previously done by the assessee citing PAN.
The above mentioned changes in the Income Tax laws of India amongst other changes are some of the significant changes made keeping into consideration and in the interest of the evolving Indian economy.