Finance Bill 2019 (No.2) – Budget Highlights

Finance Minister Nirmala Sitharaman has presented Finance Bill (No.2) on 5th Jul,2019. Below mentions are Finance Bill 2019 (No.2) – Budget Highlights. This article covers key highlights.

Finance Bill 2019 (No.2) – Budget Highlights

1. Tax Rates:
   • Tax rate of 25% is now applicable for a companies having turnover of Rs.400 crores from Rs. 250 in previous year 2017-18.
   • The new rate of surcharge for Individual, HUF, AOP, BOI and Artificial Judicial Person shall be –
     • 10% – (for income of Rs. 50 lakhs to Rs. 1 crore),
     • 15% – (for income of Rs. 1 crore to Rs. 2 crores),
     • 25% – (for income of Rs. 2 crores to Rs. 5 crores) and
     • 37% – (for income exceeding 5 crores).
2. Deductions/Exemptions/Relief:
   • In case of new home buyer a deduction is provided of Rs.1.50 Lakhs as per Section 80EEA for interest on loan taken from any financial institution for acquisition of a residential house property whose stamp duty value does not exceed Rs. 45 lakhs.
   • With a view to improve environment and to reduce vehicular pollution, it is proposed to insert a new section 80EEB in the Act so as to provide for a deduction in respect of interest on loan taken for purchase of an electric vehicle from any financial institution up to one lakh fifty thousand rupees subject to the following conditions :
     • (i) the loan has been sanctioned by a financial institution including a non-banking financial company during the period beginning on the 1st April, 2019 to 31st March, 2023;
     • (ii) the assessee does not own any other electric vehicle on the date of sanction of loan.
   • Sunset date for transfer of residential house property for claiming exemption U/S 54GB in respect of investment made in eligible start-ups, has been extended to 31st March, 2021 from 31st March, 2019. Further the condition of minimum shareholding/voting rights has been relaxed to 25% from 50%.
   • Relief under Section 89 shall be considered while computing the tax liability U/S 140A, section 143, section 234A/234B/234C to avoid genuine hardships to the taxpayers who are claiming such relief under section 89.
   • A taxpayer has been allowed to withdraw 60% of total amount from National Pension Scheme as tax free as against existing exemption of 40% of the total corpus amount.
   • In order to ensure that the Central Government employees get full deduction of the enhanced contribution, it has been proposed to increase the limit from ten to fourteen per cent. of contribution made by the Central Government to the account of its employee as per section 80CCD.
3.  Non Resident :
   • Income of the nature referred to in sub-clause (xviia) of clause (24) of section 2, arising from any sum of money paid, or any property situate in India transferred, on or after 5th July, 2019 by a person resident in India to a person outside India shall be deemed to accrue or arise in India.
4. Return Filing:
   • Furnishing of return of income shall be mandatory under Section 139 in below cases:
     • if an individual has deposited Rs. 1 crore or more in current account or
     • He has incurred expenditure of Rs. 2 lakhs or more on foreign travel or
     • He has incurred expenditure of Rs. 1 lakh or more on electricity consumption.
5. Return filing in case of exemptions:
   • It has proposed to amend the sixth proviso to section 139 of the Act to provide that a person who is claiming such rollover benefits on investment in a house or a bond or other assets, under sections 54, 54B, 54D, 54EC, 54F, 54G, 54GA and 54GB of the Act, shall necessarily be required to furnish a return, if before claim of the rollover benefits, his total income is more than the maximum amount not chargeable to tax with effect from assessment year 2020-2021 and subsequent assessment years.
6. Interchangeability of PAN and Aadhar:
   • Now Income tax return can be filed with Aadhar in case PAN is not allotted to tax payer. In case PAN and Aadhar is linked, Return can be filed using with Aadhar in place of PAN
   • PAN will be invalid if person fails intimate Aadhar to Department
7. TDS:
   • In order to further discourage cash transactions and move towards less cash economy, a new section 194N is inserted to provide for levy of TDS at the rate of two per cent on cash payments in excess of one crore rupees in aggregate made during the year, by a banking company or cooperative bank or post office, to any person from an account maintained by the recipient.
   • Online filing of application U/S 195(2) and 195(7) is introduced regarding determination of tax to be deducted at source on payment to non-residents for lower or nil rate.
   • A new section 194M is inserted in the Act to provide for levy of TDS at the rate of five per cent. on the sum, or the aggregate of sums, paid or credited in a year on account of contractual work or professional fees by an individual or a Hindu undivided family, not required to deduct tax at source under section 194C and 194J of the Act, if such sum, or aggregate of such sums, exceeds fifty lakhs rupees in a year. Tax can be deposit using PAN . TDS under this section is applicable from 01.09.2019.
   • TDS under section 194-IA is applicable 1% related payment on transfer of certain immovable property other than agricultural land on the amount of consideration paid or credited for transfer of such property. Amendment is made in the Explanation to said section and provide that the term “consideration for immovable property” shall include 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 transfer of the immovable property. So apart from consideration for property above items are also required to be included for TDS with effect from 01.09.2019.
   • TDS shall be deductible under Section 194DA at the rate of 5% only on the income component of life insurance payment instead of existing rate of TDS of 1% on the gross amount.
   • As per Section 201(1),the deductor shall not be deemed to be an assessee in default if he fails to deduct tax on a payment made to a resident, if such resident has furnished his return of income under section 139, disclosed such payment for computing his income in his return of income, paid the tax due on the income declared by him in his return of income and furnished an accountant’s certificate to this effect. This relief now extended to non-resident also .
8. Prosecution:
   • In case of failure to file an Income-tax return, the prosecution proceedings are initiated under Section 276CC if the tax payable by the assessee is Rs. 3,000 or more. Now This limit for prosecution has been increased from Rs.3,000 to Rs. 10,000.
9. Transfer Pricing :
   • Proposed to amend Section 92D of the Act , in order to provide that the information and document to be kept and maintained by a constituent entity of an international group, and filing of required form, shall be applicable even when there is no international transaction undertaken by such constituent entity with effect from assessment year 2020-21 .
10. Section 12AA Trusts/ Institute:
    • In order to ensure that the trust or institution do not deviate from their objects, it has proposed to amend section 12AA :
    • (i) at the time of granting the registration to a trust or institution, the Principal Commissioner or the Commissioner shall, inter alia, also satisfy himself about the compliance of the trust or institution to requirements of any other law which is material for the purpose of achieving its objects;
    • (ii) where a trust or an institution has been granted registration under clause (b) of sub-section (1) or has obtained registration at any time under section 12A and subsequently it is noticed that the trust or institution has violated requirements of any other law which was material for the purpose of achieving its objects, and the order, direction or decree, by whatever name called, holding that such violation has occurred, has either not been disputed or has attained finality, the Principal Commissioner or Commissioner may, by an order in writing, cancel the registration of such trust or institution after affording a reasonable opportunity of being heard. These amendments shall be effective from 1st September, 2019.
11. Section 115QA -Buy back tax on listed companies:
    • As per budget proposal ,In order to curb tax avoidance practice adopted by the listed companies, the existing anti abuse provision under Section 115QA of the Act, pertaining to buy-back of shares from shareholders by companies not listed on a recognised stock exchange, has been extended to all companies including companies listed on recognised stock exchange. Thus, any buy back of shares from a shareholder by a company listed on recognised stock exchange, on or after 5th July 2019, shall also be covered by the provision of section 115QA of the Act.
    • Accordingly, it has been proposed to extend exemption under section 10(34A) to shareholders of the listed company on account of buy-back of shares on which additional income -tax has been paid by the company.These amendments will take effect from 5th July, 2019.

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