VKJ Latest News Update

VKJ Law Offices of Vinay K. Jain Advocates & Solicitors

Union Budget 2019 – Detailed Analysis of Income tax Proposals

  1. There is not any change in slabs of tax
    rates, but there are following changes in
    surcharge rates for Individual, Hindu
    undivided family, association of persons,
    body of individuals, artificial juridical person
    w.e.f AY 2020-21.

Slab Total Income (TI) (Rs.) Rate of
Surcharge
1 50 Lakhs < TI <= 1 Crore 10% 34.32%
2 1 Crore < TI <= 2 Crores 15% 35.88%
3 2 Crores < TI <= 5 Crores 25% 39.00%
4 5 Crores < TI 37% 42.74%
Total Effective
Rate of Tax

Thus, the maximum marginal rate is also now increased.

  1. Turnover limit is increased for 25% corporate tax: Rate of income tax for domestic
    companies, where its total turnover or the gross receipt in the previous year 2017-18 does
    not exceed Rs. 400 crores will be 25% for A.Y. 2020-21. (More than 99% companies are
    covered by this provision)
    History: It was 29% for A.Y. 2017-18, where its total turnover or the gross receipt in the
    previous year 2014-15 did not exceed Rs. 5 crores. And It was 25% for A.Y. 2018- 19,
    where its total turnover or the gross receipt in the previous year 2015-16 did not exceed
    Rs. 50 crores. And It was 25% for A.Y. 2019-20, where its total turnover or the gross
    receipt in the previous year 2016-17 did not exceed Rs. 250 crores.
  2. Pre-filled tax returns will be made available to taxpayers which will contain details of
    salary income, capital gains from securities, bank interests, and dividends etc. and tax
    deductions. Information regarding these incomes will be collected from the concerned
    sources such as Banks, Stock exchanges, mutual funds, EPFO, State Registration
    Departments etc. This will not only significantly reduce the time taken to file a tax return,
    but will also ensure accuracy of reporting of income and taxes.
  3. It is proposed to insert a new section 194M in the Act to provide for levy of TDS at the
    rate of 5% on the sum, or the aggregate of sums, paid or credited in a year on account of
    contractual work or professional fees by an individual or a Hindu undivided family, not
    required to deduct tax at source under section 194C and 194J of the Act, if such sum, or
    aggregate of such sums, exceeds Rs. 50 lakhs in a year. However, in order to reduce the
    compliance burden, it is proposed that such individuals or HUFs shall be able to deposit
    the tax deducted using their Permanent Account Number (PAN) and shall not be required
    to obtain Tax deduction Account Number (TAN). So, no need to file regular TDS return in
    such cases.
[Applicable w.e.f. 01/09/2019]

4. In Section 194IA, the term ‘Consideration for Immovable Property’ is proposed to be
defined as to include all charges of the nature of club membership fee, car parking fee,
electricity or water facility fee, maintenance fee, advance fee or any other charges of
similar nature, which are incidental to transfer of the immovable property. So, matter is
very clear now whether separate agreement is made for such facilities or not. [Applicable
w.e.f. 01/09/2019]

With a view to encourage the cashless economy, it is proposed to insert a new section
194N in the Act to provide for levy of TDS at the rate of 2% on cash payments in excess of
Rs. 1 crore in aggregate made during the year, by a banking company or co-operative
bank or post office, to any person from an account maintained by the recipient. Exemption
from this provision would be granted to certain recipients such as the Government,
banking company, cooperative society engaged in carrying on the business of banking,
post office, banking correspondents and white label ATM operators, who are involved in
the handling of substantial amounts of cash as a part of their business operation. Central
government would be empowered to grant such exemption to more recipients by the way
of Gazette Notification5.

5. With a view to encourage the cashless economy, it is proposed to insert a new section
194N in the Act to provide for levy of TDS at the rate of 2% on cash payments in excess of
Rs. 1 crore in aggregate made during the year, by a banking company or co-operative
bank or post office, to any person from an account maintained by the recipient. Exemption
from this provision would be granted to certain recipients such as the Government,
banking company, cooperative society engaged in carrying on the business of banking,
post office, banking correspondents and white label ATM operators, who are involved in
the handling of substantial amounts of cash as a part of their business operation. Central
government would be empowered to grant such exemption to more recipients by the way
of Gazette Notification.
[Applicable w.e.f. 01/09/2019]

In section 194DA, it is proposed to make amendment in such a way that TDS liability
would be based on income comprised in payment amount instead of entire payment
amount, by increased rate of 5% instead of present rate of 1%. It is to be noted that
proviso to this section is not changed, so still the threshold limit for the purpose of TDS
applicability is based on ‘amount of such payment’ and not ‘income component’ only. At
present threshold is less than Rs. 1 Lakhs.
[Applicable w.e.f. 01/09/2019]

Application to determines amount chargeable to tax u/s. 195(2) and 195(7) would now
be made online.

Leave a Reply

Close Menu
%d bloggers like this: