7 Amendments under the Income Tax Act as per Finance Bill 2019
- Deemed accrual of the gift made to a person outside India:
Section 9 of the Act relates to Income deemed to accrue or arise in India. Gifts made by residents to persons outside India (other than a relative) on or after 5th July 2019 are now made taxable in India. In a treaty situation, the relevant article of applicable DTAA shall continue to apply for such gifts as well.
This amendment will take effect from 1st April 2020 and will, accordingly, apply in relation to the assessment year 2020-21 and subsequent assessment years.
- Mandatory furnishing of return of income by certain persons
- a) a person shall be mandatorily required to file his return of income if during the previous year, he-
(i) has deposited an amount or aggregate of the amounts exceeding one crore rupees in one or more current account maintained with a banking company or a co-operative bank; or
(ii) has incurred an expenditure of an amount or aggregate of the amounts exceeding two lakh rupees for himself or any other person for travel to a foreign country; or
(iii) has incurred an expenditure of an amount or aggregate of the amounts exceeding one lakh rupees towards consumption of electricity;
- b) a person who is claiming benefits on investment in a house or a bond or other assets, under sections 54, 54B, 54D, 54EC, 54F, 54G, 54GA and 54GB of the Act, shall necessarily be required to furnish a return, if before claiming the benefits, his total income is more than the maximum amount not chargeable to tax.
These amendments will take effect from 1st April 2020 and will, accordingly apply in relation to the assessment year 2020-2021 and subsequent assessment years
- Inter-changeability of PAN & Aadhaar and mandatory quoting in prescribed transactions (Sec 139A):
The provisions of section 139A are proposed to be amended so as to provide that:
(i) every person who is required to furnish or intimate or quote his PAN under the Act, and who, has not been allotted a PAN but possesses the Aadhaar number, may furnish or intimate or quote his Aadhaar number in lieu of PAN, and such person shall be allotted a PAN in the prescribed manner;
(ii) every person who has been allotted a PAN, and who has linked his Aadhaar number under section 139AA, may furnish or intimate or quote his Aadhaar number in lieu of a PAN.
Section 139A, inter alia, provides that every person, receiving a document relating to a transaction for which PAN is required to be quoted shall ensure that the PAN has been duly quoted therein.
It is proposed to provide that every person receiving such documents shall also ensure that the PAN or the Aadhaar number, as the case may be, has been duly quoted. A new sub-section (6A) is also proposed to be inserted to ensure quoting of PAN or Aadhaar number for entering into prescribed transactions and authentication thereof in the prescribed manner. Duty is also proposed to be cast upon the person receiving any document relating to such transactions, through newly proposed sub-section (6B), to ensure that PAN or Aadhaar number, as the case may be, is duly quoted, and authenticated.
In order to ensure proper compliance of the provisions relating to quoting and authentication of PAN or Aadhaar, the penalty provision contained in section 272B is proposed to be amended suitably.
These amendments will take effect from 1st September 2019.
- Tax incentive for electric vehicles
New section 80EEB introduced in the Act so as to provide for a deduction in respect of interest on loan taken for the purchase of an electric vehicle from any financial institution up to Rs.150,000/- subject to the following conditions:
- the loan has been sanctioned by a financial institution including a non-banking financial company during the period beginning on the 1st April 2019 to 31st March 2023;
- the assessee does not own any other electric vehicle on the date of sanction of loan.
This amendment will take effect from 1st April 2020 and will, accordingly, apply in relation to assessment year 2020-2021 and subsequent assessment years.
- Tax incentive for affordable housing
New section 80EEA introduced in the Act so as to provide a deduction in respect of interest up to Rs.150,000/- on loan taken for residential house property from any financial institution subject to the following conditions:
(i) the loan has been sanctioned by a financial institution during the period beginning on the 1st April 2019 to 31st March 2020.
(ii) the stamp duty value of house property does not exceed Rs. 45 lakhs;
(iii) the assessee does not own any residential house property on the date of sanction of loan.
This amendment will take effect from 1st April 2020 and will accordingly apply in relation to assessment year 2020-21 and subsequent assessment years
- A consequence of not linking PAN with Aadhaar
The existing proviso to the sub-section (2) of section 139AA, provides that the PAN allotted to a person shall be deemed to be invalid, in case the person fails to intimate the Aadhaar number, on or before the notified date.
In order to protect the validity of transactions previously carried out through such PAN, it is proposed to amend the said proviso so as to provide that if a person fails to intimate the Aadhaar number, the PAN allotted to such person shall be made inoperative in the prescribed manner.
This amendment will take effect from 1st September 2019
- Tax on income distributed to the shareholder in case of listed companies
Section 115QA of the Act provides for the levy of additional Income-tax at the rate of 20% of the distributed income on account of buy-back of unlisted shares by the company. As additional income-tax has been levied at the level of the company, the consequential income arising in the hands of shareholders has been exempted from tax under section 10(34A) of the Act.
In order to curb such tax avoidance practice adopted by the listed companies, the existing anti-abuse provision under Section 115QA of the Act, pertaining to buy-back of shares from shareholders by companies not listed on a recognized stock exchange, is proposed to be extended to all companies including companies listed on the recognized stock exchange. Thus, any buyback of shares from a shareholder by a company listed on the recognized stock exchange, on or after 5th July 2019, shall also be covered by the provision of section 115QA of the Act. Accordingly, it is also proposed to extend exemption under clause (34A) of section 10 of the Act to shareholders of the listed company on account of buy-back of shares on which additional income -tax has been paid by the company.
These amendments will take effect from 5th July 2019.