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ANALYSIS OF UNION BUDGET 2019-20

This analysis covers impetus to start-ups, changes in tax exemptions, incentives for home buyers, provisions for electric vehicles, filing requirements, TDS compliance, and amendments in tax sections.

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ANALYSIS OF UNION BUDGET 2019-20

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  1. ANALYSIS OF UNION BUDGET 2019-20 RAJEEV SOGANI R SOGANI & ASSOCIATES 1

  2. IMPETUS TO START-UPS

  3. IMPETUS TO START-UPS Changes in Section 54GB: Roll Over Benefits to incentivize investment in Start-Ups • Section 54 GB provides for exemption of Long Term Capital Gain on sale of residential property if such amount is invested in equity shares of eligible start-ups up to 31/03/2019 . • Changes in the conditions to avail this exemption are as follows:

  4. IMPETUS TO START-UPS Substitution of Section 79: Carry forward and set off of losses in case of Start-Ups

  5. SECTION 56(2)(VIIb)- EXTENDED EXEMPTION • Where a closely held company receives consideration for issue of shares from any person, being a RESIDENT, in any P.Y., and where the consideration exceeds Face Value of such shares, then: Consideration Received – FMV of the shares is taxable as “income from other source” Provided that, the provision shall not apply when consideration is received by a Venture Capital Undertaking from:

  6. CHANGES IN REAL ESTATE SECTOR

  7. INCENTIVE FOR HOME BUYERS – INSERTION OF NEW SECTION 80EEA • Deduction • Deduction of interest up to Rs. 1.5 lacs on loan taken for Residential House Property from any Financial Institution. • Eligibility Conditions • Loan shall be sanctioned during 01/04/2019 to 31/03/2020. • Stamp Duty Value of Property shall not be more than Rs. 45 lacs. • Assessee should not own any other house property.

  8. MODIFICATION IN CONDITIONS FOR DEDUCTION U/S 80-IBA Section 80-IBA provides for deduction of 100% of the profits derived from business of developing and building housing projects subject to certain conditions.

  9. NEW PROVISIONS FOR ELECTRIC VEHICLES

  10. ELECTRIC VEHICLE: ADDITIONAL DEDUCTION ON INTEREST –SECTION 80EEB • Applicable to an Individual Assessee for interest paid from 1st April, 2019. • Loan should have been sanctioned between 1st April, 2019 to 31st March, 2023. • Deduction is limited to Rs. 1,50,000 and no other deduction shall be allowed in respect of such interest.

  11. AMENDMENT IN SECTION 139 – Requirements for Filing Return of Income

  12. NEW REQUIREMENT FOR FILING RETURN FOR INDIVIDUALS/HUFs • Deposit of an amount > Rs. 1 crore in aggregate in one or more current accounts maintained with bank. • Foreign Travel Expenditure > Rs. 2 Lakh for himself or any other person. • Consumption of Electricity for an amount > Rs. 1 Lakh. • Other conditions as may be prescribed.

  13. TDS COMPLIANCE

  14. TDS ON CONTRACT & PROFESSIONAL SERVICES Individual/HUF in ambit of TDS – Insertion of section 194M w.e.f. 1st September, 2019 • Current Provisions: Currently, there is no liability of TDS on Individuals/HUFs on payment made to residentcontractor or professional if: • It is for Personal Use, or • Individual/HUF is not subjected to audit. • Insertion of new section 194M: • Who: It is now proposed to cover the above category of Individuals/HUFs. • What: Applicable to transactions with any resident involving contract work or professional services with amount >Rs. 50,00,000.

  15. TDS ON CONTRACT & PROFESSIONAL SERVICES • Insertion of new section 194M (cont..): • Rate: @ 5% • When: Applicable on payment or credit, whichever is earlier. • Points to be noted-Section 203A is not applicable: • To reduce compliance burden Section 203A does not apply, which means that TAN is not required for deposition of tax deducted, PAN will be sufficient. Other compliancesw.r.t furnishing of statements (s. 200), statements (s. 203) and returns (s. 206) are applicable.

  16. TDS U/S 194-IA: INSERTION OF EXPLANATION Inclusions in definition of ‘Consideration for Immovable Property’ w.e.f. 1st September, 2019 • Current Provisions: • Section 194-IA levies TDS @ 1% of amount of consideration for immovable property on transfer of certain immovable property other than agricultural land. • The term consideration for immovable property is presently not defined. • The buyer is bound to make a number of contractual payments besides the sales consideration, which is not being considered in levy of TDS.

  17. TDS U/S 194-IA: INSERTION OF EXPLANATION • Amendment: Following charges shall be included in the term ‘Consideration for Immovable Property’ and thus, TDS will be levied on the same: • Club membership fees • Car parking fees • Electricity or Water facility fees • Maintenance fees • Advance fees • any other charges of similar nature, which are incidental to transfer of the immovable property.

  18. NON-RESIDENTS

  19. DEEMED ACCRUAL OF GIFT MADE TO A NON-RESIDENT • Any money or property situated in India under such transfer by way of gift shall be taxable after 5th July 2019. • This transaction will be taxable in the hands of non-resident subject to exemption of Section 56(2)(x). Gift to Friend Resident Non- Resident

  20. SECTION-9Income Deemed to Accrue or Arise in India • This section deems the income of a non-resident to accrue or arise in India if he receives income from the Government, Resident or Non-resident for purpose of business or profession carried out by such person by way of: • Royalty 2. Fees for Technical Services 3. Interest Post-Amendment • If any resident transfers to a non-resident any: • Sum of money: more than Rs. 50,000, or • Immovable Property: whose Stamp duty value or Fair market value is more than Rs. 50,000. after 05/07/2019 , it shall be deemed to be income under this section.

  21. CASHLESS ECONOMY

  22. OTHER MODES PRESCRIBED FOR MAKING PAYMENTS Following are various provisions in the Act which prohibit cash transactions and allow payment or receipt only through account payee cheque, account payee bank draft or electronic clearing system through a bank account.

  23. OTHER MODES PRESCRIBED FOR MAKING PAYMENTS • At present there are few payment modes which were not covered under the ambit of the existing provisions. They are: • It is therefore proposed to allow such other electronic modes as may be prescribed, in addition to the existing permissible modes of payment, in the aforementioned sections. • Other electronic modes will be notified in due course.

  24. TDS ON CASH WITHDRAWAL TO DISCOURAGE CASH TRANSACTIONS: SECTION 194N • Every bank; etc. shall deduct tax @ 2% on cash payments to account holder (i.e. on withdrawals for recipient) exceeding Rs. 1 crore from a single account in a previous year. • Deduction shall be made on the sum that exceeds Rs.1 crore.

  25. MANDATING ACCEPTANCE OF PAYMENTS THROUGH ELECTRONIC MODES: SECTION 269SU • Applicable to every person whose turnover or gross receipts during immediately preceding previous year exceeds Rs. 50 crores. • Such person is required to provide facility for accepting payments through prescribed electronic modes, in addition to the existing electronic modes of payments, if any. • The above electronic modes will be notified in due course. • In case of failure to provide such facility, penalty of Rs. 5,000 per day can be imposed. • This section shall be applicable w.e.f 1st November, 2019.

  26. Thank You!

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