//New Income Tax Act Amendments coming into effect from 1st September, 2019 as proposed in Budget.
NEW AMENDMENTS TO INCOME TAX ACT EFFECTIVE 1ST SEPTEMBER 2019 TDS ON PAYMENTS MADE IN ADDITION TO BASIC PRICE WHILE PURCHASING IMMOVABLE PROPERTY From September 1, while buying a property, you will have to include the payment made for other services or amenities such as club membership fee, car parking fee, electricity and water facility fee and so on when computing the amount paid for the property for the purpose of deducting TDS. TDS ON PAYMENTS MADE BY INDIVIDUALS AND HUFS TO CONTRACTORS AND PROFESSIONALS (Section 194M) From September 1, individuals and HUFs making a payment to contractors and professionals exceeding Rs 50 lakh in aggregate per annum will also be required to deduct TDS at the rate of 5 per cent. TDS ON CASH WITHDRAWAL FROM BANK ACCOUNTS (Section 194N) Cash withdrawals exceeding Rs 1 crore on aggregate basis during the year from an account held with a bank, cooperative bank or post office will invite levy of TDS from September 1. The move is aimed at discouraging large cash transactions and also to promote a less cash economy and at the same time promoting digital transactions. *Update: Providing relief to the rural economy, the government has exempted agriculture produce marketing committees (APMCs) from the purview of the 2% tax deducted at source (TDS) on payments above Rs. 1 crore, an anti-abuse provision in the Income Tax Act introduced this year. Others exempt under this section were entities like the government, banks, cooperative societies and their banking correspondents. TDS ON NON-EXEMPT PORTION OF LIFE INSURANCE If life insurance maturity proceeds received by you are taxable in your hands, then TDS will be deducted @ 5% on the net income portion. The net income portion is defined as the total sum received less of total amount of insurance premium paid. BANKS AND FINANCIAL INSTITUTIONS CAN BE ASKED TO REPORT EVEN SMALL TRANSACTIONS Banks and other financial institutions are required to report specified financial transactions if the amount exceeded the threshold limit of Rs. 50,000/-. The Government, has now removed that limit and can direct the Banks and financial institutions to report any or all transactions which may be in turn verified with your returns filed. INTER- CHANGEABILITY OF PAN AND AADHAAR AND MANDATORY QUOTING IN PRESCRIBED TRANSACTIONS Aadhaar can be given in place of PAN only for certain specified transactions. Though the new law comes into effect from September 1, the government is yet to notify those certain prescribed transactions. PAN TO BE BECOME INOPERATIVE IF NOT LINKED WITH AADHAR PAN will become now become inoperative but not invalid if not linked with Aadhaar by the specified deadline.
Income TaxSeptember 17, 2019

New Income Tax Act Amendments coming into effect from 1st September, 2019 as proposed in Budget.

INCOME TAX ACT AMENDMENTS SEPTEMBER 1ST 2019

TDS ON PAYMENTS MADE IN ADDITION TO BASIC PRICE WHILE PURCHASING IMMOVABLE PROPERTY

From September 1, while buying a property, you will have to include the payment made for other services or amenities such as club membership fee, car parking fee, electricity and water facility fee and so on when computing the amount paid for the property for the purpose of deducting TDS.

TDS ON PAYMENTS MADE BY INDIVIDUALS AND HUFS TO CONTRACTORS AND PROFESSIONALS (Section 194M)

From September 1, individuals and HUFs making a payment to contractors and professionals exceeding Rs 50 lakh in aggregate per annum will also be required to deduct TDS at the rate of 5 per cent.

TDS ON CASH WITHDRAWAL FROM BANK ACCOUNTS (Section 194N)

Cash withdrawals exceeding Rs 1 crore on aggregate basis during the year from an account held with a bank, cooperative bank or post office will invite levy of TDS from September 1. The move is aimed at discouraging large cash transactions and also to promote a less cash economy and at the same time promoting digital transactions.

*Update: Providing relief to the rural economy, the government has exempted agriculture produce marketing committees (APMCs) from the purview of the 2% tax deducted at source (TDS) on payments above Rs. 1 crore, an anti-abuse provision in the Income Tax Act introduced this year. Others exempt under this section were entities like the government, banks, cooperative societies and their banking correspondents.

TDS ON NON-EXEMPT PORTION OF LIFE INSURANCE

If life insurance maturity proceeds received by you are taxable in your hands, then TDS will be deducted @ 5% on the net income portion. The net income portion is defined as the total sum received less of total amount of insurance premium paid.

BANKS AND FINANCIAL INSTITUTIONS CAN BE ASKED TO REPORT EVEN SMALL TRANSACTIONS

Banks and other financial institutions are required to report specified financial transactions if the amount exceeded the threshold limit of Rs. 50,000/-. The Government, has now removed that limit and can direct the Banks and financial institutions to report any or all transactions which may be in turn verified with your returns filed.

INTER- CHANGEABILITY OF PAN AND AADHAAR AND MANDATORY QUOTING IN PRESCRIBED TRANSACTIONS

Aadhaar can be given in place of PAN only for certain specified transactions. Though the new law comes into effect from September 1, the government is yet to notify those certain prescribed transactions.

Also read: Protect yourself from UPI frauds

PAN TO BE BECOME INOPERATIVE IF NOT LINKED WITH AADHAAR

PAN will become now become inoperative but not invalid if not linked with Aadhaar by the specified deadline.

These amendments to Income Tax Act have been brought to strengthen the economy and reduce cash transactions, at the same time broadening compliance by individuals and institutions alike.

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