The Income Tax slab rates for the major part of the tax-paying population have been kept unchanged, while the surcharge imposed on super-rich was increased. FM Nirmala Sitharaman announced a couple of changes which included TDS on
cash withdrawals of over Rs 1 crore per year, additional tax benefits on electric vehicles and affordable housing loans etc.
cash withdrawals of over Rs 1 crore per year, additional tax benefits on electric vehicles and affordable housing loans etc.
5 changes announced in the Budget which taxpayers should be aware of:
1. Interchangeability of PAN and Aadhaar: Linking PAN card and Aadhaar card was made mandatory by the government to file income tax return. In Budget 2019, the FM announced interchangeability of PAN and Aadhaar card which will allow ITR filers to file their returns by using either Aadhaar or PAN. With this new announcement, ITR can be filed without PAN by quoting Aadhaar number.
It may be noted that it might be difficult to file ITR without quoting PAN because PAN is the unique identification number in which the TDS is reflected. Therefore, the implementation of Aadhaar-PAN interchangeability may take some time.
2. TDS on cash withdrawal over Rs 1 crore a year: In order to discourage the practice of making business payments in cash, the FM proposed to levy TDS of 2% on cash withdrawal exceeding Rs 1 crore a year from a bank account. According to experts, this move is expected to benefit the government since it will be easier to track money floatation and movement of cash. It might help the government curb the problem of black money.
3. Increase in surcharge on individual/HUF with income of Rs 2 to 5 crore and above: The government instead of increasing the tax on all taxpayers, chose to tax the ultra-rich people more. Those in highest income bracket earning an annual income of Rs 2 to 5 crore and above will now need to contribute more to national development. The government proposed to increase the surcharge on individual income of Rs 2-5 crore and over Rs 5 crore by 3% and 7% respectively.
4. Additional tax deduction on electric vehicle: The government has been pushing electric vehicles and electric vehicle infrastructure in the country for quite some time now. In order to make electric vehicles affordable to the consumer, the FM proposed an additional income tax deduction of Rs 1.5 lakh on loans taken to purchase electric vehicles. This move is aimed to make people switch to electric vehicles in the country
5. Tax relief up to Rs 3.5 lakh on interest paid on home loan: In order to lower the interest rate burden on home loan borrowers, the government proposed tax relief of up to Rs 3.5 lakh on interest paid on home loans. It is to be noted that the salaried class nowadays are not able to buy a house due to the high-interest rate on housing loans. By lowering this interest rate, the government will encourage more people to purchase their own houses.
