Union Budget 2019
After a thumping victory for the second consecutive term, all eyes were undoubtedly laid upon the maiden Union Budget presented by the erstwhile defence minister, who is now the first Full Time Women Finance Minster of India, Smt. Nirmala Sitharaman. In midst of slowing economic growth, high unemployment, cacophony caused by steps like demonetization and rolling over of GST, criticisms from the opposition party and high expectations from the people of the country from the re-elected NDA government this budget was very vital for the ruling government.
The government has always hyped the welfare of the common man. However, no change in tax rates has been proposed in the union budget. Even though there were expectations of increase in the quantum of basic exemption limit, no change is proposed and basic exemption for an individual remains unchanged at Rs. 2,50,000/-. Further, an individual/HUF is now burdened with the requirement to deduct and deposit TDS @ 5% on payments made to contractors or professionals (even if expenditure is of personal nature) if it exceeds Rs. 50,00,000/-.
Supporting its view on the emphasis of digital payments and tightening its grip on cash transactions, cash withdrawals from Banks, Post office, Co-operative banks shall attract TDS @ 2% if the amount of such cash withdrawals during the year from an account exceeds Rs. 1 crore.
It would now be obligatory to file Return of Income even for those individuals/HUF whose total income is below taxable limit, but have claimed deductions against Capital Gains transaction by investing in house property, bonds, industrial undertaking, etc.,
On purchase of immovable property, TDS will now be required to be deducted even on ancillary costs like parking fees, maintenance fees, electricity & water facility fee, etc. and not just on the value of the property.
To promote ‘Housing for All’ initiative, deduction upto Rs. 1,50,000/- on interest on loan for affordable residential property will be allowed provided Stamp Duty value of the property does not exceed Rs. 45 lakhs.
In order to incentivize purchase of an electric vehicle by an individual, deduction of an amount upto Rs. 1,50,000/- for interest paid on loan taken for purchase of electric vehicle will be allowed provided the loan is taken on or before 31st March, 2023.
Exemption to tax is proposed to be increased from present 40% to 60% of the pension received from National Pension System Trust Scheme on closure/optingout of the pension scheme.
In recent years, Income Tax Department has initiated criminal proceedings against many defaulters who did not file Return of Income in time. It is now proposed that if tax liability is paid by the assessee through self-assessment tax before the end of Assessment Year even though return is not filed on time, no prosecution can be launched unless unpaid tax liability exceeds Rs. 10,000/-.
In order to recover more tax from high income earning individuals, even though the rate of tax is kept unchanged, surcharge @ 25% of the income tax is introduced when total income exceeds Rs. 2 crores but is less than Rs. 5 crores and Surcharge @ 37% is introduced in case where Total Income exceeds Rs. 5 crores.
Further, it would be mandatory to file Return of Income in case where deposits in current accounts exceed Rs. 1 Crore, expenditure on Foreign travel exceeds Rs. 2 lacs, the electricity consumption exceeds Rs. 1,00,000/-.
Coming to corporate taxation, the rate of tax for companies will be 25% in case where turnover of FY 2017-18 does not exceed Rs. 400 crores. Almost 99.3% of the companies will be covered by this tax rate. For the other domestic companies rate of tax will be 30% and in case of foreign company it will be 40%.
In order to curb corruption, e-assessment is introduced from the coming year.
