Five Major Finance Changes effective from 01.07.2020

In this article, I have brief five major changes effective from 01.07.2020.

Restrictions on ATM withdrawals are back

The Finance Minister on 24 March, 2020 announced that for three months debit cardholders could withdraw cash from any bank’s ATM free of charge for the next three months.

From today onwards, these relaxations has ended and the regular limits and charges will apply.

Penalty for non-maintenance of bank account balance

Another relief provided by FM in March was the waiver of penalty on non-maintenance of bank account balance for three months.

This relief are over on 30 June, 2020. Now non-maintenance of minimum balance will again attract a penalty. The penalty amount levied for non-maintenance of minimum balances will vary from bank to bank.

Stamp duty on buying of shares and mutual fund units

From 1 July, all shares and mutual fund purchases will attract a stamp duty of 0.005 percent and any transfer of security (MF units) will attract a stamp duty of 0.015 percent. The government had introduced changes to the Stamp duty Act last year by introducing a uniform rate of stamp duty on trading of shares and commodities.

Higher penal interest on delayed tax payments

For delayed payments of advanced tax, self-assessment tax, regular tax, TDS, TCS, equalization levy, STT, CTT made between 20th March 2020 and 30th June 2020, the reduced interest rate at 9% per annum instead of 12% or 18% will be charged for this period. No late fee/penalty shall be charged for delay relating to this period.

Any delayed tax payment made after June 30, 2020 will attract penal interest of 12 per cent /18 per cent as applicable instead of 9 percent.

TDS on cash withdrawal

Section 194N of Income Tax Act

TDS on payment of certain amounts in cash

Deductor: Bank, Co-operative bank or a post office

If aggregate payment in cash from one or more accounts during a previous year to an account holder exceeds the threshold limit given below:

The applicability of new provision as per amendments in the Finance Act 2020

The cash withdrawal limit for this F/Y will be considered from 01.04.2020.