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Finance Bill (No.2) 2019 - Direct Tax Updates: Business, Digital Payments, Deductions, TDS

Get comprehensive updates on the Finance Bill (No.2) 2019 related to business, corporate/non-corporate, digital payments, deductions, TDS, filing of return/PAN/AADHAR, charitable institutions, start-ups, and more.

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Finance Bill (No.2) 2019 - Direct Tax Updates: Business, Digital Payments, Deductions, TDS

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  1. Finance Bill (No.2) 2019DIRECT TAX by CA Ramprasad caram@sbsandco.com

  2. Flow • Business- Corporate/Non-Corporate • Digital Payments • Deductions • TDS • Filing of Return/ PAN/AADHAR • Charitable Institution • Start-ups • Surcharge and Rebate • Non-Resident • Prohibition of Benami Property Act • Black Money Act, 2015

  3. Business –Corporate/Non-Corporate • Total Income of Domestic Company is subject to tax @25% in case its total turnover or gross receipt in the previous year 2017-18 does not exceed Rs. 400 Crores. • Int/Royalty/FTS/Other sum payable to NR will be allowed as deduction in case TDS is not deducted, whole or part, and NR payee has paid the tax and filed the return as per Sec 201. • Interest payable on loan or borrowing from a deposit taking NBFC(D-NBFC)/Systematically important non-deposit taking NBFC (SIND-NBFC)be allowed on payment basis U/S 43B. • Income from Bad and Doubtful debts be recognized on receipt basis in case of D-NBFC/SIND-NBFC U/S 43D

  4. Digital Payments • Every person carrying on business whose total turnover or gross receipts exceeds Rs. 50 Crores in the immediately preceding previous year shall provide facility for accepting payment through prescribed electronic mode . (Sec 269SU).(W.e.f 01/11/2019). • TDS @2% of the sum by bank/co-op bank/post office as income tax in case where any sum or aggregate of sums in cash in excess of Rs. 1Crore from an account maintained by the recipient(Sec 194N)(W.e.f 01/09/2019) • Besides A/C payee cheque or A/C Draft/ RTGS or NEFT under the following sections a prescribed electronic mode is permitted. • Sec 35AD/43(1)/40A(3)/43CA/44AD/ 50C/80JJAA/269SS/269T

  5. Deductions • Contribution to a specified account for a fixed period of not less than 3 years will be allowed as deduction U/S 80C • NPS contribution @14% of the salary by the Central Government and 10% of the salary made by any other employer is allowed as deduction U/S 80CCD(2) • Interest payable of Rs. 1,50,000/- on loan taken from financial institution during FY 2019-2020 by an individual for the purpose of acquisition of first residential house property whose stamp duty value does not exceed Rs. 45 Lakhs U/S 80EEA. • Interest payable of Rs. 1,50,000/- on loan taken by individual from financial institution during FY 2019-20 to FY 2022-23 for the purchase of an electric vehicle.

  6. TDS • TDS @5% by individual/HUF in relation to sum payable to any resident for carrying out any work, incl supply of Labour, or fees for professional services where such sum or aggregate of such sums exceed Rs. 50 Lakhs U/S 194M. No TAN required. ( W.e.f 01/09/19). • Charges of nature of club membership fee/car parking fee/ electricity/water facility fee/maintenance fee/ advance fee or any other sum of similar nature which are incidental to transfer of immovable property will be subject to Sec 194-IA (W.e.f 01/09/19) • TDS U/S 194DA would be on the amount of income comprised in the sum payable under Life Insurance Policy. (W.e.f 01/09/19) • Form and manner of filing application U/S 195(2)/195(7) will be prescribed.

  7. Filing of Return/PAN/AADHAR-1/2 • Every person other than Company/ Firm is required to file return of income where roll over benefit U/S 54/54B/54EC/54F/54G/54GA/54GB are claimed and without considering such benefits total income is more than maximum exemption limit. • Every person other than Company/Firm are required to file return of income where they undertaken the following transaction(s):- • Deposit of amount or aggregate amounts more than Rs. 1 Crore in one or more current account maintained with a bank; • Incurred expenditure amount or aggregate amounts more than Rs. 2 lakhs for foreign travel; • Incurred expenditure of amount or aggregate amounts more than Rs. 1 Lakh towards consumption of electricity; • any other prescribed conditions

  8. Filing of Return/PAN/AADHAR-2/2 • Every person who is required to furnish or intimate or quote his PAN under the Act and who has not been allotted PAN may furnish or intimate or quote his AADHAR number. PAN will be allotted to such person in the prescribed manner. • Every person who has been allotted PAN and who has linked his AADHAR number U/S 139AA may furnish or intimate or quote his AADHAR no in lieu of PAN. ( W.e.f 01/09/19) • In case a person fails to intimate AADHAR number, the PAN allotted to such person shall be made inoperative in the prescribed manner. ( W.e.f 01/09/19)

  9. Charitable Institutions • Pr.CIT/CIT at the time of granting of registration U/S 12AA also satisfy himself about the compliance with the requirements of any other law which is material for the purpose of achieving its objects. • Pr.CIT/CIT may cancel the registration in case the trust or institution has violated requirements of any other law which is material for the purpose of achieving its object and order, direction or decree for such violation is passed and such order etc was not disputed or has attained finality.

  10. Start-ups • Roll over benefit of capital gains U/S 54GB is extended to the investment in eligible start-ups up to 31/03/19. • The min shareholding of assessee in eligible start-ups is to be 25% instead of 50% U/S 54GB. • Eligible start-ups can carry forward and set off losses incurred in any year prior to previous year against the income of the previous year on satisfaction of either of maintaining 51% of voting power or continue to hold shares provided the loss was incurred with in 7 years of incorporation. • The concession given 56(2)(viib) will be withdrawn in case the start-up fails to fulfil the conditions mentioned in the notification issued by Ministry of Commerce and Industry.

  11. Surcharge and Rebate Surcharge:- Rebate Changes made which were made to the Sec 87A by FA 2019 is retained. As a result, a resident individual whose total income does not exceed Rs. 5 Lakhs shall be entitled to deduction from income tax - 100% of amount of income tax or Rs. 12,500 which ever is less.

  12. Non-Resident • Sec 56(2)(X) applies to transaction(s) carried on between resident and non-resident outside India and is deemed to accrue or arise in India U/S 9. (W.e.f 05/07/19). Exceptions provided U/S 56(2)(X) continue to apply. • DDT is not applicable to unit in IFSC deriving income solely in convertible foreign exchange declaring dividend out of its current income or accumulated income on or after 01/04/17. (W.e.f 01/09/19) • Deduction U/S 80LA be allowed to unit in IFSC @100% of income from such unit for any 10 consecutive assessment years out of 15 years commencing from the year in which permission under the relevant laws was obtained.

  13. Prohibition of Benami Property Transactions Act • U/S 23 of the Act that no prior approval of Approving Authority is required where initiating officer has already initiated proceedings by issuing notice U/S 24(1). • U/S 24(3) to provide for provisional attachment of the property and passing of an order U/S 24(4) the period is to be reckoned from the end of the month in which notice U/S 24(1) is issued. • Penalty of Rs. 25,000/- for failure to comply with summons issued U/S 19(1) or furnish information as required U/S 21 of the Act. • Certified copies of records or other documents in the custody of the authority is admitted as evidence in any proceedings for the prosecution

  14. Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 • “Assessee” shall mean a person being • A resident in India within the meaning of section 6 of the Income-tax Act, in the previous year, or • A person being a non-resident or not ordinarily resident in India within the meaning of clause (6) of section 6 of the Income-tax Act, in the previous year, who was resident in India either in the previous year to which the income referred to in section 4 relates, or in the previous year in which the undisclosed asset located outside India was acquired.

  15. Thank You for your patient hearing ! Please reach me for any queries – caram@sbsandco.com – +91 988-598-3074

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