Union Budget 2019 - Key Highlights and Takeaways

Union Budget 2019 – Key Highlights and Takeaways

Our First Female Finance Minister Nirmala Sitharaman presented Union Budget 2019-20, which was the first budget presented in Modi 2.0 Government. Changes proposed in the budget will come into effect from September 1, 2019

Download the Union Budget 2019 speech from here 

Key budget highlights can be viewed here 

In today’s blog, we are highlighting the key takeaways proposed in Union Budget 2019 related to direct taxation – 

Additional Surcharge on income over ₹ 2 crores

Individual/ HUF/ AOP/ BOI taxpayers will have to pay tax at a maximum marginal rate of 39 percent of their income is between ₹ 2 crores and up to ₹ 5 crores. The maximum marginal tax rate will be 42.74 percent if the income is above ₹ 5 crores.

It is because the surcharge has been increased on income over ₹ 2 crores, making the super-rich more taxable. 

Quoting of Aadhar Number allowed for filing ITR

If you don’t possess a PAN number, you can file your income tax return using Aadhar Number. 

Also, Aadhar Number and PAN number have been made interchangeable, which means Aadhar Number can be quoted wherever PAN number is required. 

Check out our blog which covers all the important changes in the Income-tax slabs here

Filing of ITR mandatory for few specified persons

Those who deposit more than ₹ 1 crore in a current account in a financial year, spend more than ₹ 2 lakhs on foreign travel or pay electricity bills of more than ₹ 1 lakh in a financial year have to compulsorily file an income tax return, even if their income is less than the basic exemption limit.

Wizcounsel can help you in hiring a tax expert hassle-free at affordable prices. Visit now and get your income tax returns filed painlessly. 

Union Budget 2019 - Key Highlights and Takeaways

TDS at 2% on cash withdrawal of ₹ 1 crore or more in an FY

If an individual or entity withdraws ₹ 1 crore or more from a bank account in a financial year, the bank will deduct TDS at 2%, under the newly introduced Section 194N. The limit of ₹ 1 crore or less is an aggregate limit.

However, TDS will not be charged if the amount is withdrawn from a bank or post office by –

  • Central or State Government,
  • Banks,
  • Co-operative banks,
  • Post Offices,
  • Banking Correspondents,
  • White Label ATM Operators,
  • Other persons notified by Government in consulting with RBI.

Interest deductible on loan borrowed for electric vehicle

If you have borrowed a loan for purchasing an electric vehicle, you can claim the interest amount as a deduction, up to ₹ 1.5 lakhs per annum. This deduction will be available under section 80EEB.

The loan must be sanctioned between 1st April 2019 to 31st March 2023, and the taxpayer shouldn’t own any other electric vehicle on the date of sanction of loan.

Want to understand the impact of budget on your business operations? Consult a CA, who can outline process-wise impact analysis to help you make crucial decisions. 

Additional interest deductible on a home loan

Taxpayers can claim an additional deduction of interest paid on a home loan up to ₹ 1.5 lakhs. This deduction will be available for taxpayers buying or constructing homes up to ₹ 45 lakhs under the affordable housing scheme, and the loans are borrowed up to 31st March 2020. 

This change will allow taxpayers to claim a total deduction of ₹ 3.5 lakhs on the home loan, as they can currently claim a deduction of ₹ 2 lakhs under Section 24B.  

Individuals/ HUFs to deduct TDS while paying to contractors

Currently, Individuals/ HUFs don’t have to deduct TDS while paying to contractors unless they are liable to get their accounts audited.

However, the budget has introduced Section 194M, under which individuals and HUFs will have to deduct TDS at 5 percent if they are paying more than ₹ 50 lakhs to contractors or professionals in a year. This amendment shall be effective from 1st September 2019.

For any information on the new Form 16, Click Here.

Consideration under 194IA includes additional costs

‘Consideration for immovable property’ under section 194IA will include club membership fee, advance fee, electricity and water facility fees, or similar fees related to immovable property. 

CPSE ETF brought under the ambit of ELSS

The budget has brought CPSE ETFs under Equity Linked Saving Scheme (ELSS), which means, investment in CPSE ETFs will be eligible for deduction under section 80C. 

Exemption of capital gains for investment in start-ups

If a taxpayer earns capital gains from the sale of a residential property and invests the capital gain amount in a startup, he’ll be eligible to get his capital gains exempted till FY 2020-21. 

Corporate tax rate to be 25% for companies up to ₹ 400 crores turnover

Companies having an annual turnover up to ₹ 400 crores have to pay income tax at 25%. Almost 99.3% of the total registered companies will be covered under this limit. 

Did the budget fulfill your expectations? Is it going to help India become a 5 trillion dollar economy in years to come? Let us know in the comment section below. 


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