Effective Income Tax Amendments Impact on Your Life

Since initiation, a lot of amendments are included in income tax laws to make rigid the architecture of our tax regime. Presented in the month of July, Income tax changes in 'Budget 2019' will be effective from 1 September. To put a check on the liquidity in the market, the rule is initiated that the cash withdrawal beyond Rs. 1 Crore in a year from any financial organization will invite TDS. Also, the transactions under property maintenance (car parking fee, club membership and other maintenance fees) will invite TDS. TDS will be high on life insurance maturity received which is taxable on your part.

Following is the list of income tax changes introduced in the current prospectus:

Section 194N - TDS on Cash Withdrawal Beyond Rs. 1 Crore: Section 194N is the latest amendment made by Indian Governance which clearly states that the cash withdrawals beyond Rs. 1 Crore will come under the TDS boundaries. All the financial institutions will deduct TDS at the rate of 2% on withdrawals exceeding Rs. 1 Crore in a year. However, the transactions before September 1 will not invite any TDS. The IT department made it clear to the taxpayers that since the threshold of Rs. 1 Crore is with respect to the previous year, the deduction under Section 194N will be calculated from 1 April 2019.

Section 194 - IA - TDS on Amenities: Lawful under Section 194 - IA of Income Tax Act, TDS at 1% will be deducted on club membership, car parking, security, water facility, etc. TDS will be deducted on such utilities if the value of the property is beyond Rs. 50 Lakhs. The law is effective from 1st September 2019. From now onward TDS will be calculated in regards to the amenities one avails with the property.

Section 194M - TDS on Paying Rs. 50 Lakhs to a Contract: The budding law under Section 194M of Income Tax Laws calls for TDS deduction at the rate of 5% for paying the amount more than Rs. 50 Lakhs in lieu of some work or contract or the fees for professional services in an FY. The law is again applicable for the transactions after 1 September.

Section 194DA - Higher TDS on Insurance Maturity: The TDS from 1% is extended to 5% on the amount of Life Insurance maturity proceeds received which comes under tax liability (if the amount received is Rs. 1 Lakh or more). As per the current laws, if the annual premium paid on an insurance policy is less than 10% of the gross amount received on maturity, then the amount is tax exempt.

PAN or Adhaar any of the Two is Valid: Via Budget 2019, FM Nirmala Sitharaman proposed to allow the interchange of Permanent Account Number (PAN) and Adhaar Card. Now either of the two documents can be applied for any transaction. Adhaar can now be presented instead of OAN for cash deposits above Rs. 50,000.