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New income tax rules 2019
Cash withdrawals over Rs 1 crore from one or more accounts will attract a surcharge of 2%.
Union Finance Minister Nirmala Sitharaman made several tax-related amendments, in her Union Budget speech on July 5. The changes were to be implemented from September 1.
These are the 5 changes made in income tax rules
1) 2% Tax on cash withdrawals of over Rs 1 crore
The cash withdrawals exceeding Rs 1 crore from one or more bank accounts, post offices or co-operative society will attract a surcharge of 2% from September 1 under a new Section called 194N in income tax laws. Payments made on or after September 1 will attract the provisions of Section 194N.
The cash is withdrawn before 1 September 2019, will not be subjected to TDS under Section 194N. However, the calculation of the amount of cash withdrawal for triggering deduction under section 194N will be considered from 1 April 2019.
2) Tax on purchase of immovable property
Earlier, under the Section of 194-IA of the Act, a TDS of 1 per cent was levied on any payment on transfer of the immovable property except agricultural land. From September 1, besides the sales, payments such as car parking fee, club membership fee, electricity and water facility fees, maintenance fee, advance fee etc. will fall under the term 'consideration for immovable property' and will also be included for calculation of TDS.
3) TDS deduction for professional services
The government announced a new Section called 194M in income tax laws under which individual is needed to deduct TDS @5% for paying an amount to a professional (architect, designer etc.) for their services that cross Rs 50 lakh during a financial year. Payments made on or after September 1 will attract the provisions of Section 194M.
4) TDS on a life insurance policy
A higher TDS of 5%, from 1% earlier, will be charged if life insurance maturity proceeds received that are taxable in your pocket. More before, the TDS on a life insurance policy, use to be 1 per cent of the maturity value, but now it will be 5 per cent on the net maturity amount (maturity amount minus the premium paid).
As per the new rule, the maturity proceeds in a life insurance policy is tax-free only if the sum assured is a minimum ten times of the premium. For example, if the premium value stands at Rs 1 lakh, the sum assured needs to be at least Rs 10 lakh for the maturity value to be tax-free.
5) Banks to report smaller transactions
Finance Minister Nirmala Sitharaman, in Budget 2019, introduced a new rule.
Earlier banks used to provide the Statement of Financial Transactions (SFTs) for the transaction of more than Rs 50,000; now, they are implied to report smaller transactions as well.
