For Quick Alerts
ALLOW NOTIFICATIONS  
For Daily Alerts

5 Tax Changes That Become Effective From 1 September 2019

|

There were two Union Budget sessions pertaining to this financial year (2019-20) due to the general assembly elections held in April-May period. As a result, tax changes announced during the post-election budget session, that was held on 5 July, will be imposed starting 1 September 2019 instead of 1 April.

Here are the 5 tax changes that become effective on 1 September 2019:

1. TDS on cash withdrawals
 

1. TDS on cash withdrawals

2 percent tax on making an aggregate cash withdrawal exceeding Rs 1 crore from one or multiple bank accounts was proposed in the Budget 2019 presented in July.

The TDS (tax deducted at source) was decided to be introduced to discourage high-value withdrawals. It will be effective from 1 September 2019.

Banks or co-operative societies will deduct an amount equal to 2 percent of the amount exceeding Rs 1 crore from a person's cash withdrawal from one or more accounts that are linked to the same PAN.

Section 194N has been inserted in the Income Tax Act in this regard.

2. Higher TDS on taxable portion of insurance proceeds

2. Higher TDS on taxable portion of insurance proceeds

Under section 10 (10D), maturity proceeds from a life insurance policy are exempt from tax. However, this benefit is not eligible on policies where the annual premium exceeds 10 percent (or 20 percent in case of policies sold prior to April 2012) of the sum assured.

Under section 194DA, all taxable payments made towards life insurance policies attracted 1 percent TDS if the total amount exceeded Rs 1 lakh. This percentage of TDS deducted will be increased to 5 percent and will be applicable to the net income (total amount received minus the insurance premium to be paid).

3. PAN and Aadhaar rules for income tax purposes
 

3. PAN and Aadhaar rules for income tax purposes

It was earlier announced that for those who missed on linking their PAN with Aadhaar before the specified deadline, the PAN would be treated invalid-that is as if the PAN never existed.

However, considering the fact that it would remove the validity of previous conducted transactions, the rules in the Budget 2019 were changed to make PAN "inoperative" and not invalid if not linked with Aadhaar.

Further, starting 1 September, one can file their ITR (income tax returns) using Aadhaar, in case they do not have PAN.

It is yet to be clarified on the extent of quoting of Aadhaar in place of PAN in other circumstances. Aadhaar can also be quoted in place of PAN in case of making high-value transactions.

4. TDS on additional payments towards property purchases

4. TDS on additional payments towards property purchases

It was earlier announced that for those who missed on linking their PAN with Aadhaar before the specified deadline, the PAN would be treated invalid-that is as if the PAN never existed.

However, considering the fact that it would remove the validity of previous conducted transactions, the rules in the Budget 2019 were changed to make PAN "inoperative" and not invalid if not linked with Aadhaar.

Further, starting 1 September, one can file their ITR (income tax returns) using Aadhaar, in case they do not have PAN.

It is yet to be clarified on the extent of quoting of Aadhaar in place of PAN in other circumstances. Aadhaar can also be quoted in place of PAN in case of making high-value transactions.

5. TDS on payments made to contractors, professionals

5. TDS on payments made to contractors, professionals

From 1 September, if the payment made to a contractor or a professional or commission or brokerage exceeds Rs 50 lakh in a financial year, an individual or HUF (Hindu Undivided Family) is required to deduct tax at source at the time of crediting such amount.

This new change will be applicable on payments made by individuals or HUF who are not required to have their accounts audited as per the Income Tax Law.

Taxes are to be withheld at 5 percent on such payments.

Read more about: income tax taxes
Story first published: Saturday, August 31, 2019, 15:48 [IST]
Company Search
Get Instant News Updates
Enable
x
Notification Settings X
Time Settings
Done
Clear Notification X
Do you want to clear all the notifications from your inbox?
Settings X
We use cookies to ensure that we give you the best experience on our website. This includes cookies from third party social media websites and ad networks. Such third party cookies may track your use on Goodreturns sites for better rendering. Our partners use cookies to ensure we show you advertising that is relevant to you. If you continue without changing your settings, we'll assume that you are happy to receive all cookies on Goodreturns website. However, you can change your cookie settings at any time. Learn more