The Budget this year presented in July mandated some income tax changes that have come into effect from September 1, 2019. Here are some of the changes that will affect the individuals as much as corporate/companies or business establishments.
The government has introduced a new Section called 194N in income tax laws under which cash withdrawals exceeding Rs 1 crore in aggregate in a year from banks, post offices or co-operative society engaged in carrying on the business of banking will attract a TDS at the rate of 2 per cent. The Central Board of Direct Taxes (CBDT) further said that if a person has already withdrawn Rs 1 crore or more in cash up to August 31, 2019, in the current fiscal, the two per cent TDS shall apply on all subsequent cash withdrawals. Payments made on or after September 1 will attract the provisions of Section 194N. Hence, any cash withdrawal prior to September 1, 2019, will not be subjected to the TDS.
However, since threshold of Rs 1 crore is with respect to the previous year, the calculation of amount of cash withdrawal for triggering deduction under section 194N will be counted from 1 April, 2019.
If any person purchases an immovable property of Rs 50 lakh or more (excluding agricultural land), he/she is required to deduct TDS at the rate of 1 per cent from September 1, 2019, onward. The amendment included all charges of the nature of club membership fee, car parking fee, electricity and water facility fees, maintenance fee, advance fee or any other charges of similar nature, which are incidental to the transfer of immovable property.
It is to be noted that the TDS is levied at 1% if the value of the property exceeds 50 lakh. So now, charges like club membership fee, car parking fee, electricity or water facility fee will also be included for calculation of TDS.
Any payment made to a contractor or a professional or a brokerage exceeds Rs 50 lakh in a year will attract 5 per cent TDS from an individual or HUF (Hindu Undivided Family) at the time of crediting such amount. So individuals making payments of over Rs 50 lakh, for house renovation, wedding functions or any other purpose to a single professional in a year would be required to deduct tax at the time of making the payment.
If life insurance maturity proceeds received are taxable, then the TDS will be deducted at the rate of 5 per cent on the net income portion. The net income portion is defined as the total sum received less of the total amount of insurance premium paid. Earlier, the TDS was 1% of the gross maturity payout under the policy.
Interchangeability of PAN and Aadhar is also one of the changes that Finance Minister Nirmala Sitharaman had announced during her budget presentation. Taxpayers who don't own a PAN card (Permanent Account Number) can now file Income Tax returns with their Aadhaar Card.
[With Agency Inputs]