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Key Changes in Income Tax for A.Y 2019-20

Relevant changes in Income Tax for A.Y 2019-20

 

The Salaried and Pensioners 

  • Standard Deduction of Rs. 40,000 in place of present exemption for transport allowance and reimbursement of miscellaneous medical expenses.However, benefit of enhanced transport allowance to differently abled persons would continue to be available. 

Relief to Senior Citizens 

  • TDS is not required to be deducted on interest on securities. Benefit also available for interest from all fixed deposit schemes and recurring deposit schemes.
  • Exemption of interest income on deposits with banks and post offices to be increased from Rs. 10,000 to Rs. 50,000.
  • Hike in deduction limit for health insurance premium and/ or medical expenditure from Rs. 30,000 to Rs. 50,000 under section 80D.
  • Increase in deduction limit for medical expenditure for certain critical illness from Rs. 60,000 (in case of senior citizens) and from Rs. 80,000 (in case of very senior citizens) to Rs. 1 lakh for all senior citizens, under section 80DDB.
  • Increase in investment limit in Pradhan Mantri Vaya Vandana Yojana from ₹7.5 lakh to ₹ 15lakh. The government has also extended PMVVY scheme till march 2020

Capital Gain 

  • No adjustment in respect of transactions in immovable property where Circle Rate value does not exceed 5 percent of consideration. 
  • Tax on Long Term Capital Gains (being equity shares of a company or a unit of equity oriented fund or a unit of business trust) exceeding Rs. 1 lakh at the rate of 10 percent, without allowing any indexation benefit. However, all gains up to 31st January, 2018 will be grandfathered.
  • From A.Y. 2019-20, section 54EC is amended to restrict the exemption available thereunder to capital gain arising from the transfer of a long-term capital asset, being land or building or both only and not any other capital assets. Further, the period for redemption of long-term specified asset, being a bond issued on or after 1.4.2018, is proposed to be increased from three years to five years.

Dividend Distribution tax on equity mutual funds 

  • Tax at the rate of 10 percent will be levied on the dividend distributed in case of equity mutual funds. However this dividend will remain tax-free in the hands of investors. The tax will be deducted by the fund houses before distribution of dividend.

Trusts 

  • Payments exceeding Rs. 10,000 in cash made by trusts and institutions to be disallowed and would be subject to tax. 

Company

  • Reduced Rate of 25% tax to companies reporting turnover up to Rs. 250 crore in Financial Year 2016-17.
  • Every company will now have to adopt more detailed revenue recognition ways from April 1 as the government has notified a new accounting standard. Indian Accounting Standard (Ind AS) 115. The other two standards, Ind AS 18 and 11, which are related to revenue and construction contracts would be withdrawn.

New Cess

  • A new cess named “Health and education cess on income-tax” is to be levied @4% on income-tax

National Pension Scheme (NPS)

  • Previously n 10(12A) provides for an exemption of upto 40% of the total amount payable to an employee contributing to the NPS on closure of his account or on his opting out the scheme. Further, in cases of partial withdrawal from NPS, section 10(12B) provides for exemption of upto 25% of contributions made by an employee. These exemptions were, however, not available to non-employee assessee contributing to NPS. From A.Y. 2019-20, the benefit of exemption under section 10(12A) is proposed to be extended to all assessees.  However, benefit of exemption under section 10(12B) in case of partial withdrawal continues to be restricted to employees alone.

Requirement for PAN

  • Every person, not being an individual, which enters into a financial transaction of an amount aggregating to ₹ 2,50,000 or more in a financial year shall be required to apply to the Assessing Officer for allotment of PAN. Further, the managing director, director, partner, trustee, author, founder, karta, chief executive officer, principal officer or office bearer of such person or any person competent to act on behalf of suchperson would also be required to apply to the Assessing Officer for allotment of PAN.

Return of Income

  • As per new law penalty of Rs 5,000 will be levied if the return is filed after the due date but before December 31 of that year and Rs 10,000 post December 31. However, as relief to small taxpayers, if your income is not more than Rs 5 lakh, the maximum penalty levied will be Rs 1,000. 
  • Apart from penalty on late filing of ITR, if you make a mistake while filing for FY2017-18, then you would have time till 31 March, 2019 to file your revised return.  

Earlier a taxpayer was allowed to revise his returns up till two years from the end of the financial year for which the return was filed. However, from now on, he will be allowed to revise his return only up till one year from the end of the financial year.

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