The enactment of tax reform legislation will have far-reaching consequences for businesses and individuals. Finance budget is changed every year in the month of February by the government which are generally applicable to the next following financial year beginning from April 1st unless otherwise specified. As we are stepping ahead towards the beginning of a new financial year (“FY”) 2019-20, various amendments and provisions under Income- tax and GST (Goods and service tax) laws are regulated which shall be applicable from April 1, 2019.
Emendations to Income tax Act
- Section 87A rebate
An amount of INR 2,500 is raised to INR 12,500 under tax rebate which shall be available to a resident individual whose total income does not exceed INR 5,00,000.
- Nil deemed rental income on having two residential house properties
Currently, if an individual owns more than one self-occupied house property, then only one of the properties as per his choice shall be treated as self-occupied with its annual value as nil. The other house properties are deemed to be let-out as per section 23 and a notional rent shall be taxed under the head Income from House Property. However, from FY 2019-20, an assessee can claim annual value as nil in respect of two-self occupied house properties. Moreover, there is no change in aggregate limit for deduction of INR 30,000 or INR 2,00,000 in respect of interest on housing loan.
In addition to the above, an exemption under section 54 can be claimed by an assessee even if he invests in two residential houses in India from FY 2019-20. This benefit shall be available where the amount of the capital gain does not exceed INR 2 crore where the assessee can exercise this option only once in a lifetime.
- TDS on interest income under section 194-I
The limit of INR 1,80,000 hiked to INR 2,40,000 for threshold deduction of tax at source under section 194-I.
- DTAA (Double Taxation Avoidance Agreement) with Singapore and Mauritius
The protocol stated that India had the right to tax capital gains @50% of the prevailing domestic rates on transfer of shares of an Indian Company acquired on or after April 1, 2017. However, with effect from April 1, 2019, capital gains shall be charged @100% of domestic tax rates.
Reassessments for GST
- New schemes available @ 6% to Intra- state suppliers of goods and services
A new scheme is introduced wherein an Intra-state supplier can now pay GST at the rate of 6% (3% for Central and 3% for respective State) on first supplies of goods or services for INR 50 lakhs for which the benefits can be availed with effect from April 1, 2019. This scheme shall be available only if the aggregate turnover of supplier does not exceed INR 50,00,000 during the previous financial year. The benefit of this scheme shall not be available to service providers who are rendering services in multiple States or through e-commerce websites.
- Threshold limit to take registration has been increased to INR 40 lakhs
Every person is required to obtain the GST registration if his turnover from supply of goods or services exceeds INR 20 lakhs. If supplier is engaged in supply of goods, the limit is increased to INR 40 lakhs. In other words, if you are engaged in supply of goods and your total turnover in the current financial year does not exceed INR 40 lakhs, you are not required to take registration under GST inter alia; you are not making any inter-state supply or not a non-resident taxable person.
- Due dates for filing of GSTR-1 and GSTR-3B have been announced
The due dates of filing of GSTR-1 and GSTR-3B for the months of April to June, 2019 by a registered person are notified as below:
- Turnover up-to INR 1.50 crore- GSTR-1 shall be filed on a quarterly basis by July 31, 2019 or;
- Turnover exceeding INR50 crore- GSTR-1 shall be filed on a monthly basis by 11th of succeeding month.
- GSTR-3B shall be filed on monthly basis by 20th of succeeding month.
- Diminished GST rates
The promoters shall be given one -time option to continue to pay tax at the old rates (i.e., at 8% or 12% with Input tax credit) on ongoing projects (if construction and actual booking have started before April 1, 2019) which have not been completed by March 31, 2019. The option shall be exercised once within a prescribed time frame and where the option is not exercised within the prescribed time limit, new rates shall apply. However, new tax rates in real estate sector are recommendations of the GST Council and date of applicability of new tax rates have not been notified yet.
Apart from the above changes, some specific benefits are made for forex dealers, air travel agents, dealers of second hand goods and taxpayers engaged in life insurance businesses are given a choice to determine the value of such supply. The Income Tax Act introduces new rules aimed at providing greater parity between the tax treatment of owners of pass-through entities and corporations, but also includes guardrails intended to prevent pass-through owners from characterizing wage income as more lightly taxed business income.
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