Dalal Street Investment Journal – July 20, 2019

120 DALAL STREET INVESTMENT JOURNAL I JULY 22 - AUG 4, 2019 DSIJ.in^

Individual Taxation

• No change in slab and tax rates.
  Present rate continue for the next
  financial year 2019-20.


• However, surcharge has been
  increased for Individual, HUF, AOP.
  etc having income between 2 crore and5 crore to 25% of the income tax
  and income above `5 crore to 37%.
  The effective tax rate for Individual/
  HUF/AOP accordingly is now 39% if
  income is between INR 2 – 5 crore and
  42.7% if income exceeds INR 5 crore.


• Interest on housing loan for the
  purpose of affordable house will be
  deducted up to 1.5 lakh on loan taken from financial institution for acquisition of residential house property whose stamp duty does not exceed45 lakh.


• New Section 80EEBB has been
  inserted to provide for deduction of
  `1.5 lakh in respect of interest on loan
  taken for purchase of an electrical
  vehicle from any financial institution.


• NPS benefits enhanced – The amount
  received by the employee on closure or
  opting out of National Pension
  Scheme is exempt upto 60% or
  withdrawal, vis-a-vis 40% earlier.
  Further, the contribution of the
  Central government scheme is now
  upto 14% of the total salary of the
  employee vis-a-vis 10% earlier.

Corporate taxation

• The threshold limit for lower
  corporate tax of 25% has been
  increased from 250 crore to 400
  crore. Domestic companies (turnover/
  gross receipts of the previous year
  2017-18 not exceeding `400 crore) will
  be taxable at 25% plus surcharge plus

Tax Column

HEC for assessment year 2020-21.

• Buyback of shares of listed company
  Presently, unlisted company is liable to
  pay tax on buyback of its shares. This
  was introduced mainly to check
  practice of unlisted company resorting
  to buyback of shares instead of
  payment of dividend. In order to curb
  such tax avoidance practice adopted by
  the listed company, the existing
  anti-abuse Section 115Q pertaining to
  buyback of shares has been extended
  to listed companies on recognized
  stock exchanges.

Widening of tax base

• A new Section 194M has been inserted
  to require any individual or HUF (who
  is not liable to tax audit) to deduct tax
  at source from the sum paid to a
  contractor or professional if aggregate
  payment during the year exceeds ` 50
  lakh. The tax can be deposited under
  this provision without any requirement
  to obtain TAN.


• As per Section 194-IA, a buyer is
  required to deduct tax at source from
  the consideration paid to buy an
  immovable property. An explanation
  has been inserted that ‘consideration
  for immovable property’ shall include
  all charges paid towards club
  membership fee, car parking fee,
  electricity and water facility fees,
  maintenance fee or any other charges
  of similar nature, which are incidental
  to transfer of the immovable property.


• Any sum of money paid or any
  property situated in India transferred
  on or after July 5, 2019, by a person
  resident in India to a person outside
  India, shall be deemed to accrue or
  arise in India under section 9.
  However, the existing provisions for
  exempting gifts provided in Section
  56(2)(x) will continue to apply.


• Mandatory furnishing of return of

income by certain persons

Furnishing of return of income shall

be mandatory under section 139 if an

individual has deposited `1 crore or

more in the current account or he has

incurred expenditure of `2 crore or

more on foreign travel or he has

incurred expenditure of `1 lkh or more

on electricity consumption. Further, a

person claiming deduction under

section 54, 54B, 54D, 54E, 54F, 54G,

54GA, 54GB of the Act are required to

furnish return before claim of the

rollover benefit if his total income is

more than the maximum amount not

chargeable to tax. This amendment

will take effect from April 1, 2020 and,

accordingly, apply to assessment year

2020-21.

PAN and Adhar can now be used

interchangeably. The person not

having PAN can file his return of

income by quoting Aadharnumber.

PAN allotted to a person shall be

deemed to be invalid if he fails to

intimate the Aadharnumber to the

department.

Measure for promoting less cash

economy

• Under the existing provision of the
  Act, there is a prohibition of cash
  transaction and payment or receipt
  was allowed only through account
  payee cheques/account payee drafts or
  through electronic clearing system
  through a bank account. The relevant
  provisions are such as Section 13A
  receipt of donation by political parties,
  Section 35AD, expenditure of capital
  nature, Section 40A certain cash
  expenditure in excess of `10,000 per
  day, Section 43(1) acquisition of fixed
  assets, Section 44AD presumptive
  taxation scheme, Section 80JJAA
  additional deduction of amount of
  30% of additional employee cost,
  Section 269SS, Section 269ST, Section
  269T.
  In order to encourage other electronic

Jayesh Dadia

Chartered Accountant

Budget 2019 Highlights

Pertaining To Direct Taxes