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Budget 2019: Income tax highlights

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Publish Date: July 05th, 2019

By: Sandhya Kannan, Head – Content

Nirmala Sitaram presented her maiden Union Budget as Finance Minister for the re-elected NDA government. While the comprehensive budget for FY 2019-20 touched upon all economic aspects here are some announcement pertaining to taxes that might concern you.

The annual tax revenue has grown by 78% over the last five years from Rs 6.37 lakh crore in 2013-14 to Rs 11.37 lakh crore in 2018-19.

Tax filing is mandatory for:

  • For high-value cash transactions exceeding Rs 1 crore
  • Expense on foreign travel exceeding Rs 2 lakh
  • Power bills exceeding Rs 1 lakh

The PAN and Aadhaar can be used interchangeably for the purpose of filing tax returns. Here are some of the key changes in income tax provision announced in Budget 2019.

Corporate Tax

TDS of 2% will be levied on cash withdrawals exceeding Rs 1 crore from bank accounts.

Annual turnover ceiling raised from Rs 250 crore to Rs 400 crore for availing of a lower corporate tax rate of 25% that will cover about 99.3% of all businesses in India.

Taxpayers with an annual income, not exceedings Rs 5 crore, can file GST returns on a quarterly basis.

GST on the manufacturing of electric vehicles to go down from 12% to 5%.

Additional tax deduction of Rs 1.5 lakh available for manufacturing electric vehicles.

TDS of 2% for withdrawals of Rs 1 crore in a year from bank accounts for business payment.

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Personal Tax

No change in income tax slabs from FY 2018-19.

A hike in surcharge for individuals with taxable income between Rs 2 crore and Rs 5 crore at 3% and for those with an income over Rs 5 crore at 7%.

Interest paid on affordable housing (for borrowings on or before March 31, 2020) will attract an additional deduction of Rs 1.5 lakh on home loans up to Rs 45 lakh.

Additional Rs 1.5 lakh deduction on income tax on home loans.

Deduction of up to Rs 1.5 lakh available on interest payment of loan procured for purchasing an electric vehicle.

Excise duty on petrol and diesel increased by Re 1 per litre.

5% customs duty on imported books.

Duty raised on loudspeakers, electrical sockets/ switches, auto parts, cigarettes, CCTV cameras, imported vinyl flooring and tiles, PVC pipes and imported cashew kernels.

Custom duty on indoor and outdoor units of split AC up from 10% to 20%.

Tax on metal fittings up from 10% to 15%.

Tax on marble slabs increased from 20% to 40%.

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Investment Tax

Section 80C benefits available for investments in Central Public Sector Enterprise (CPSE) exchange-traded fund (ETF).

For Central Government employees Section 80CCD(2) limit raised 14% from the present 10%.

Pension benefit for retail traders and shopkeepers with an annual turnover below Rs 1.5 crore under the Pradhan Mantri Karam Yogi Maandhan Scheme.

TDS calculated on the sale of immovable property will include incidental payments such as maintenance, power, water bills etc.

Surcharge on high-income assets increased to 39% for properties between Rs 2 crore and Rs 5 crore, and 42.74 % for properties above Rs 5 crore.

Customs on gold and precious metals increased to 12.5%.

Angel Tax - Angel investors and start-ups will not be scrutinised by the IT department. An e-verification mechanism will establish the identity of the investors and the source of funds.

No scrutiny on the valuation of shares for Category-II Alternative Investment Funds.

Exemption on tax from Capital Gains arising out of the sale of residential property for investment in start-up till FY21.

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