Do You Know About These Changes In Income Tax Rules

Written by Vidya Kumar

September 5, 2019

Picture

Executive Summary: There are five key changes in Income Tax rules that are applicable from September 1, 2019. These include changes in TDS on cash withdrawals,  net amount received from life insurance company, payments made to professionals and contractors and purchase of immovable property. As per the new rules, PAN and Aadhaar are interchangeable while quoting for specific transactions.

The finance minister announced a few changes in income tax rules in the post election budget for FY 2019-2020. These were to come in effect from September 1, 2019. Let us look at these changes and how they affect us –
1) TDS on cash withdrawals from bank account 
Cash withdrawals that exceed  a total of ₹1 crore in a year will attract TDS at 2% of the amount withdrawn. This is applicable to withdrawals from banks, post offices or co-operative societies engaged in business of banking. This is as per the newly inserted Section 194N in the Income Tax Act.

2) TDS on payments made by individuals and HUFs to contractors and professionals 
Payments made to a contractor or a professional or payments of commission or brokerage that exceed ₹50,00,000 in a financial year will be subject to TDS. The TDS applicable is 5% of the amount paid. This is applicable to individuals and HUFs (Hindu Undivided Family) that do not get their accounts audited. For example, this clause will be applicable for payments made for home renovation or event management.

3) TDS on life insurance 
If the payout of life insurance maturity amount is taxable,  TDS @ 5% of the net amount received will be applicable from now. Earlier TDS was 1% of the gross amount received under the policy
Net amount = Gross amount received –  Total amount of insurance premium paid

4) TDS on additional payments made when purchasing immovable property 
TDS is deducted @ 1% of the total amount when a person purchases an immovable property of the value of ₹50,00,000 or more. Other charges such as club membership fee, car parking fee, electricity and water facility fees, maintenance fee and other similar payments that are incidental to the transfer of immovable property  were not included in this sum. Now all these additional charges are included for calculation of TDS amount. This is not applicable to agricultural land. 

5) Interchangeability of PAN and Aadhaar 
It has been proposed that PAN and Aadhaar are interchangeable from 1 September 2019 for transactions. People who do not have PAN can quote Aadhaar in their transactions that require  PAN number details. 

0 Comments

INSIGHTS + MONEY STORIES

INSIGHTS + MONEY STORIES

Our Newsletter features money stories and useful insights on personal finance that can help you make informed decisions and stay up-to-date with the latest trends in personal finance. Sign up today!!!

You have Successfully Subscribed!