The Union Budget 2019-20: An Overview

The Union Budget 2019-20:

 DIRECT TAX                                                          

  • No Income Tax Liability for Resident Individual earning Income upto Rs. 5,00,000 p.a.
  • Basic tax rate remains unchanged for Firms and LLPs at 30%.
  • 25% Tax Rate for all companies with annual turnover of upto Rs.400 Crores.
  • Proposed to increase rate of surcharge as under:
Income Range Financial Year 2018-19 From Financial Year 2019-20 Effective Changed Rates
50L to 1 Cr 10% 10% (unchanged) 34.32%
1 Cr to 2 Cr 15% 15% (unchanged) 35.88%
2 Cr to 5 Cr 15% 25% 39%
Above 5 Cr 15% 37% 42.74%
  • To discourage cash payments, 2% TDS to be deducted for withdrawal more than Rs. 1 Crore in a year from a Bank Account under section 194N (w.e.f 01.09.2019).
  • TDS of 5% on Contractual payments or Professional fees exceeding Rs. 50 Lakhs in a year paid by Individual or HUF under section 194M (w.e.f 01.09.2019).
  • TDS on immovable property shall now be deducted on consideration of Rs 50 Lakhs or more inclusive of incidental charges (Car parking fees, maintenance fees, etc.)
  • Additional Income Tax Deduction of Rs. 1.5 Lakhs for interest on Loans for purchase of

Affordable Residential Housing Property under section 80EEA.

  • Income Tax Deduction of Rs. 1.5 Lakhs for interest on Loans for purchase of Electric Vehicles

under section 80EEB.

  • Interchangeability of Aadhaar and PAN for filing ITR. Now Taxpayers not having a PAN can file their Income Tax Return by quoting their Aadhaar No.
  • Aadhaar Card for NRIs with Indian passports to be issued after arrival in India, without waiting for mandatory 180 days.
  • Gifts to Non-resident by a person resident in India (unless otherwise exempt), shall be taxable income in the hands of Non-residents.
  • Mandatory filing of Income Tax Returns for Persons who have deposited amount exceeding Rs. 1 Crore in one or more bank accounts or incurred expenditure for Foreign Travel exceeding Rs. 2 Lakhs or has incurred electricity expenses in excess of Rs. 1 Lakh.
  • Faceless E-assessment for Scrutiny assessments with no Personal Interactions. Case selection for scrutiny on random basis.

 INDIRECT TAX                                                          

  • Implementation of fully automated GST refund module.
  • Reduction of GST rate on electric vehicles from 12% to 5%.
  • Taxpayers having Annual Turnover upto Rs. 5 Crores can now file quarterly return for GST.
  • Customs duty on gold and precious metals hiked to 12.5% from 10%.

·    Changes in rates of Petrol and Diesel are summarized below;

Tax Commodity From To
Excise Duty Petrol Rs. 7 per litre Rs. 8 per litre
Excise Duty Diesel Oil Re. 1 per litre Rs. 2 per litre
Road and Infrastructure Cess Petrol and Diesel Oil Rs. 8 per litre Rs. 9 per litre
  • Sabka Vishwas Legacy Dispute Resolution Scheme introduced for central excise and service tax and cess pending as on 30 June 2019.
S. No. Description Tax dues Relief available
1 Show cause notice (SCN)/appeals – Involving duty INR 50 lakh or less 70%
More than INR 50 lakh 50%
2 SCN/appeals – Involving late fee/penalty only Full amount
3 Arrears INR 50 lakhs or less 60%
More than INR 50 lakhs 40%
4 Enquiry/investigation/audit INR 50 lakhs or less 70%
More than INR 50 lakhs 50%

 CORPORATE                                                          

  • Suggestions have been made to SEBI to consider increasing minimum public shareholding in listed companies from the current threshold of 25 % to 35%.
  • STT is proposed to be applied only on the difference between the settlement price and the strike price in case of exercise of options.
  • Buy-back Tax at 23.3% proposed to be extended to listed shares as well.
  • Exemption under section 10(34A) for income from buy-back to shareholders is now extended to shareholders of listed companies.
  • Clarity on filing Master File is provided. A person is required to be file it even when there are no international transactions.
  • Interest on non-performing assets (NPAs) is taxed on receipt basis in case of banks. This benefit is now being extended to Non-banking financial companies (NBFCs).

 START-UPS                                                          

  • Exemption of Capital Gain on sale of House Property for investment in Start-ups extended to 31st March 2021.
  • Some of the conditions relating to carry forward and set off of losses in case of start-ups are proposed to be relaxed.
  • Start-ups and Investors will not be subject to scrutiny in respect to valuation of share premium.

 ALTERNATIVE INVESTMENT FUND (AIF)                                                          

  • Exemptions for capital gain arising out of securities traded in IFSC to category III AIF.
  • Losses (other than business loss) of Category I and II AIFs will now be passed on to Unit Holders, subject to the units being held for more than one year (w.e.f. 01.04.2020).
  • No requirement for justification of FMV for shares of Start-ups has now been extended to Category II AIFs as well.

Disclaimer:

This material has been prepared for private circulation only, You should consult your tax, legal and accounting advisors before engaging in any transaction. Tax law is subject to continual change, at times on a retrospective basis and may result in incremental taxes, interest or penalties. Should the law or its interpretation change, the article may be inappropriate.

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