Attention taxpayers! These changes in income tax rules will impact you from September 1
New Delhi: Union Budget 2019 was expected to bring tax changes and finance minister Nirmala Sitharaman delivered on the expectations as she announced several income tac changes in her maiden budget. From tax on cash withdrawals to PAN-Aadhaar interchangeability, many monumental changes were proposed. Normally, income tax-related changes announced in the Budget come into effect from April 1. However, since Budget 2019 was presented after the general election, several tax changes will be effective from September 1 onwards.
It may be noted that despite strict income tax laws, there is still a large section of people in the country who evade taxes and get away with it. These people most often incorporate illegal practices to evade tax. All the tax changes announced in the Budget are aimed to increase tax compliance.
If you are a taxpayer, these income tax changes will impact you from today (September 1):
1.TDS on cash withdrawals: From now, cash withdrawals of over Rs 1 crore during the financial year from an account held with a bank, cooperative bank or post office will attract TDS deduction of 2 per cent. A new section 194N has been added in the Income Tax Act according to which TDS will be levied at the rate of two per cent on cash withdrawals made from the account.
2.TDS on additional payments made while purchasing immovable property: From today onwards, payment made for services or amenities, such as club membership fee, car parking fee, electricity, water facility fee etc while buying an immovable property will have to be included while calculating the amount to be paid for the property for the purpose TDS deduction.
3.TDS on payments made to contractors and professionals: From September 1, if the total of payments to a single contractor or professional during a financial year exceeds Rs 50 lakh, TDS at 5% would be deductible. As per Section 194N of the Income Tax Act, “Tax Deduction at Source (TDS) on payment by Individual/HUF to contractors and professionals at present there is no liability on an individual or Hindu undivided family (HUF) to deduct tax at source on any payment made to a resident contractor or professional when it is for personal use.”
4.TDS on insurance maturity proceeds: From September 1, TDS will be deducted at the rate of five per cent on net maturity proceeds of life insurance. Earlier 1% TDS was on the entire maturity amount. However, now insurers will deduct 5% TDS on the net proceeds (maturity proceeds minus total premiums paid) and not on the entire amount. Under Section 194DA of the I-T Act, TDS is applicable on all taxable payments over Rs 1 lakh made under life insurance policies.
5.PAN-Aadhaar link: From today onwards, failing to link PAN with Aadhaar by September 30 will lead to your PAN card becoming inoperative. Earlier, the law stated that PAN will become invalid if not linked with Aadhaar by the specified deadline. However, in the budget, the operative word was changed from ‘invalid’ to ‘Inoperative’. Although, the government has not yet clarified as to what will happen if the PAN becomes inoperative.
6.Use Aadhaar to file ITR: The interchangeability of Aadhaar and PAN in ITR filing will come into effect from September 1. PAN and Aadhaar card can now be used interchangeably to file income tax returns. People who don’t have PAN can file income tax returns (ITR) by quoting the Aadhaar number. Further, the Aadhaar card can be used wherever PAN is required.