Proposals In Union Budget To Change The Scenario Of The Tax System
Union Budget of India or Annual Budget Statement is usually presented in February before the start of the new financial year (April 1). In 2019, under BJP government, the Union Budget was presented twice. The first momentary budget was presented in February, looking at its dominion in general elections, the government presented the full budget on 5 July 2019 to the Parliament.
Both the budgets have briefings about Income-tax which may interest a taxpayer. Briefings given by Mr. Piyush Goyal (the meantime finance minister) in February are already effective, on the other hand, the proposals kept by our present-day finance minister Nirmala Sitharaman in recent budget are on board and yet to be accepted by the Parliament.
Below mentioned are the tax proposals announced in both the budgets:
Related To Income Tax
For FY 2019-20 budget, no alterations are done in Income tax slabs and rates came out in July 2019. Whereas, for those whose gross income is more than 2 Crore and less than 5 Crores per annum or above 5 Crore per annum there are possibilities of paying greater surcharges.
Sources have confirmed that, according to the new laws, those who fall in between 2 Crore to 5 Crore category have to give 39% as tax and those who are above 5 Crore category will have to pay more than 49% as tax.
Well, the individual whose taxable income is less than 5 Lakhs per annum (FY-2019-20) are eligible to avail tax refunds and will pay zero tax.
Zero Tax On NPS (NATIONAL PENSION SYSTEM)
This is for people who have invested or are investing in the National Pension System (NPS).
As per the protocols, NPS at the time of maturity grants 60% of the bulk as a lump sum and it is mandatory that the remaining 40% is used to purchase annuity plan (investment plan for life long regular payments).
It's time for the investors to celebrate as the Budget 2019 has revealed that the Pension withdrawals at the time of maturity are immune from any kind of taxes. As per the new legislation, 60% of the bulk can be withdrawn out of which only 40% of the lump sum withdrawal is exempted from tax.
Government professionals who have invested in NPS Tier-II accounts can claim tax-benefits under section 80C.
Tax Deducted On Home Loans
Mentioned in Budget 2019, a person can claim a deduction of Rs. 1.5 Lakhs on the interest paid on home loan under the recent section 80EEA.
Applied terms and conditions are:
- Person applying for a loan should not own a house on the day of sanctioning of the loan.
- The cost of the house should not surpass Rs. 45 Lakhs.
- Loans have to be adopted in between 1 April 2019 to 31 March 2020
TDS On Cash Withdrawals
This proposal may concern some taxpayers. In Budget 2019, it is recommended that 2% Tax Deducted at Source (TDS) has to be imposed if the sum of the cash withdrawal exceeds Rs. 1 Crore in a Financial Year from a single account. This rule is applicable on bank accounts, post office accounts or other co-operative bank accounts. The step is to promote digital payments over cash transactions.
Filing An ITR Is Important
As stated in Budget 2019, filing an ITR A.Y 2019-20 via Gen IT software is mandatory under the following criteria:
- Deposits in the current bank account should not exceed the 1 Crore Rs in a Financial Year. Accounts can be in banks or any other co-operative.
- Foreign travel expenses go beyond 2 Lakhs in Financial Year.
- If a person’s electricity bill goes beyond 1 Lakhs in a Financial Year.
- Or the person is claiming capital gains on the property in a Financial Year.
TDS Is Not Limited To Property Only
While buying a property a person also pays for other amenities like clubhouse, car parking, electricity and water maintenance, watchman payments, etc., such payments made will be included under Tax Deducted at Source (TDS).
The rule will be effective from 1 September 2019, currently, the TDS is paid only for the property and not for other amenities.
TDS Marked On Payments Above 50 Lakhs
Individuals or Hindu Undivided Families (HUF) will have to deduct 5% TDS at the time of payment to the contractors or other professionals, if the amount paid exceeds Rs. 50 Lakhs.
This rule again is effective from 1 September 2019, currently, there is no TDS on such conditions.
Profits Received By NRI Have To Face Tax
Any type of monetary profit received by a Non-Resident-Indian (NRI) from an Indian resident will come under a taxable amount. Tax has to be paid by the NRI on gains from the property or other resources in India. Effective from 5 July 2019.
The briefings made in the momentary budget which was presented in February will continue to be effective for FY 2018-19. Apart from the proposals mentioned above,there are other points which are mentioned in the Budget:
- Now, this came to the rescue for salaried individuals, as per the proposals of Union Budget, standard deductions allowed on ITR is increased from Rs. 10,000 to Rs. 50,000.
- You don't have to pay any tax on the property from which you are not getting a rent (maybe that is vacant). Such rents are known as notional rent or assumed rent.
- For those who are earning long term capital gains (LTCG), you can invest your LTCG in a house to save tax. But keep in mind the value of the LTCG should not exceed Rs. 2 Crore.