Key Highlights of Union Budget 2019

Key Highlights of Union Budget 2019

Finance minister Nirmala Sitharaman in her maiden budget kept the income tax slab rates unchanged but announced many new income tax proposals that could impact many tax payers.

PAN Card, Aadhaar Interchangeable for Filing Income Tax Returns (ITR):

  • Finance Minister Nirmala Sitharaman announced the decision to make PAN and Aadhaar cards interchangeable soon.
  • PAN and Aadhaar have been made interchangeable, allowing those who do not have PAN to file income tax returns (ITR).
  • This means that taxpayers will need either Aadhaar card or PAN card to file their ITR.


Additional Deduction on Home Loans:

  • Additional income tax deduction of ₹1.5 lakh on home loans for affordable houses costing below ₹45 lakh.
  • This benefit will be available for home loans taken till March 2020.
  • Cumulatively, the interest paid on home loan deduction will go up to ₹3.5 lakh, from the current ₹2 lakh for self-occupied house property.


Promotion of Electronic Vehicles:

  • The government also announced ₹1.5 lakh income tax deduction on interest paid on loans for purchase of electric vehicles.


TDS on Cash Withdrawal:

  • The government also announced 2% TDS on cash withdrawal on amount exceeding ₹1 crore in a year.


Benefit to Retail Investors:

  • Retail investors in CPSE (Central Public Sector Enterprises) ETFs could get ELSS-like income tax benefits, according to the Budget proposals.
  • The government today set a ₹1.05 lakh crore divestment target this year.
  • Currently, investments made in ELSS (equity linked savings scheme) mutual funds, which come with a lock-in period of three years, are eligible for tax deduction of up to ₹1.50 lakh under Section 80C of the Income Tax Act.


Increase in Income Tax Surcharge:

  • The government today increased income tax surcharge for HNIs (high net worth individuals) earnings more than ₹2 crore a year.
  • Those earning between ₹2-5 crore will have shell out 3% more, with surcharge rate being increased from 15% to 25%.
  • Those earning above ₹5 crore will have to shell out a surcharge of 37%, from current 15%.


Corporate tax:

  • Finance Minister Nirmala Sitharaman proposed to raise the annual turnover limit from ₹250 crore to ₹400 crore for availing a lower corporate tax rate of 25%.
  • The proposal would cover 99.3 per cent of the companies operating in the country, she said while presenting Union Budget 2019-20 in the Lok Sabha.
  • She further said only 0.7 per cent of the companies will now remain outside the 25 per cent corporate tax bracket.


Compulsory Filing of IT Return in Certain Cases:

  • In other changes, the government proposed that persons who enter into certain high value transactions have to mandatorily file their tax returns even if their taxable limit is less than ₹2.5 lakh.
  • The transactions include depositing an amount exceeding ₹1 crore one or more current accounts; has incurred expenditure of more than ₹2 lakh for himself or any other person for travel to a foreign country; or has incurred expenditure of an amount or aggregate of the amounts exceeding ₹1 lakh towards consumption of electricity.


Other important Points:

  • Fiscal Deficit this year is 3.3% brought down from 3.4%.
  • Provide banks with Rs. 70,000 crore of capital to boost credit.
  • Business establishments with annual turnover of more than ₹50 crore will need to offer low cost digital modes of payments like BHIM UPI, UPI-QR Code, Aadhaar Pay, debit cards, NEFT and RTGS to their customers.
  • Petrol and diesel would be dearer by about ₹2 per litre, Finance Minister Nirmala Sitharaman announced in her budget speech.
  • Hike in the customs duty on gold and other precious metal from existing 10 per cent to 12.5 per cent.
  • Merchant discount rate won't be charged on businesses with yearly turnover of over Rs. 50 crore and also on their customers. RBI and banks will absorb these costs. The move is expected to be a major push to cashless payment.


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Financial Management