The government today proposed many changes in income tax provisions for this year. Finance minister Nirmala Sitharaman in her maiden budget kept the income tax slab rates unchanged but announced a slew of new income tax proposals that could impact many tax payers. The government today announced that Aadhaar and PAN would be made interchangeable for tax-filing purpose. This means that if you don’t have a PAN, you can file returns using Aadhaar.
— Additional income tax deduction of ₹1.5 lakh on home loans for affordable houses costing below ₹45 lakh. This benefit will be available for home loans taken till March 2020. Cumulatively, the interest paid on home loan deduction will go up to ₹3.5 lakh, from the current ₹2 lakh for self-occupied house property.
— The government also announced ₹1.5 lakh income tax deduction on interest paid on loans for purchase of electric vehicles.
— The government also announced 2% TDS on cash withdrawal on amount exceeding ₹1 crore in a year.
— Retail investors in CPSE(central public sector enterprises) ETFs could get ELSS-like income tax benefits, according to the Budget proposals. The government today set a ₹1.05 lakh crore divestment target this year. Currently, investments made in ELSS (equity linked savings scheme) mutual funds, which come with a lock-in period of three years, are eligible for tax deduction of up to ₹1.50 lakh under Section 80C of the Income Tax Act.
— The government today increased income tax surcharge for HNIs (high net worth individuals) earnings more than ₹2 crore a year. Those earning between ₹2-5 crore will have shell out 3% more, with surcharge rate being increased from 15% to 25%. Those earning above ₹5 crore will have to shell out a surcharge of 37%, from current 15%.
"The budget was an effort at laying down a clear roadmap for tax administration over the next five years with introduction of a slew of measures specifically aimed at simplifying the tax filing process, e-assessment process and interchangeability of PAN with Aadhaar. Additionally, the ideology of taxing the super-rich continues to be carried out with increase of surcharge on individuals earning more than ₹2 crore. Also, in order to provide an impetus to affordable housing scheme, additional relief of ₹1.5 Lakh per year has been provided to first time home owners," Nitin Baijal, director at Deloitte Haskins and Sells LLP.
In other changes, the government proposed that persons who enter into certain high value transactions have to mandatorily file their tax returns even if their taxable limit is less than ₹2.5 lakh. The transactions include depositing an amount exceeding₹1 crore one or more current accounts; has incurred expenditure of more than ₹2 lakh for himself or any other person for travel to a foreign country; or has incurred expenditure of an amount or aggregate of the amounts exceeding ₹1 lakh towards consumption of electricity.
