New Income Tax Rules Came Into Effect From September 1, 2019
In Budget 2019, Finance Minister announced some changes in income tax rules and some of them came into force from September 1. The new income tax rules relate to TDS or tax deducted at source applicability on payment to contractors, professionals and brokers; purchase of immovable property, cash withdrawal beyond ₹1 crore and taxable life insurance proceeds. Later, the government exempted agriculture produce marketing committees (APMCs) from the purview of the 2% tax deducted at source (TDS) on payments above ₹1 crore. Here are some amendments to Income Tax Act affecting individuals that have taken effect from 1 September 2019:
1) TDS by an individual/HUF on payment to resident contractors, professionals and brokers: Individuals are now required to deduct tax at 5% if the aggregate payment by way of brokerage or professional fees or payments to a contractor exceed ₹50 lakh in a financial year. The TDS needs to be deposited using the individual’s PAN, says Homi Mistry, partner at Deloitte India, adding that a TAN is not required.
2) TDS at the time of purchase of immovable property: While deducting 1% tax on the consideration paid on transfer of immovable property, the buyer should also include payments such as club membership fees, maintenance fees, advance fees, car parking fees, electricity and water facility fees, etc which are incidental to the transfer, while calculating the consideration on which tax needs to be deducted, says Homi Mistry.
TDS will be deducted at 1% if total consideration paid on transfer of immovable property, including payments such as club membership fees, maintenance fees, advance fees, car parking fees, electricity and water facility, exceeds ₹50 lakh.
3) Interchangeability of PAN and Aadhaar: Where a person’s Aadhaar number is linked to his PAN, he/she is free to quote his Aadhaar number instead of his PAN. And where a person has not been allotted a PAN, he/she can quote his Aadhaar number instead of PAN and such person shall be allotted a PAN.
4) TDS on cash withdrawal: TDS @2% will be deducted by a banks or co-operative bank or Post Office on cash withdrawals by any person in excess of ₹1 crore in aggregate during the financial year.
5) TDS on taxable life insurance proceeds: Life insurance proceeds, if taxable, are subjected to TDS at 5% on the income comprised therein, instead of 1% on the gross proceeds earlier. It is to be noted that no TDS is deductible if the sum payment is less than ₹1 lakh or if the sum is received on the death of the insured person.
Under income tax rules, insurance policy maturity proceeds are exempted from income tax if sum assured in a life insurance policy is at least 10 times the annual premium. For policies issued before April 2012, the premium must be less than 20% of the sum assured to get the tax benefit on maturity.
Source: livemint
