5 income tax rule changes that came into force this month

In Budget 2019, Finance Minister announced some changes in income tax rules and some of them came into force from September 1. The new income tax rules relating to TDS or tax deducted at source applicability on payment to contractors, professionals, and brokers; purchase of immovable property, cash withdrawal beyond ₹1 crore and taxable life insurance proceeds. Later, the government exempted agriculture produce marketing committees (APMCs) from the purview of the 2% tax deducted at source (TDS) on payments above ₹1 crore. Here are some amendments to the Income Tax Act affecting individuals that have taken effect from 1 September 2019:

1) TDS by an individual/HUF on payment to resident contractors, professionals and brokers: Individuals are now required to deduct tax at 5% if the aggregate payment by way of brokerage or professional fees or payments to a contractor exceed ₹50 lakh in a financial year. The TDS needs to be deposited using the individual’s PAN, says Homi Mistry, partner at Deloitte India, adding that a TAN is not required.

2) TDS at the time of purchase of immovable property: While deducting 1% tax on the consideration paid on transfer of immovable property, the buyer should also include payments such as club membership fees, maintenance fees, advance fees, car parking fees, electricity and water facility fees, etc which are incidental to the transfer, while calculating the consideration on which tax needs to be deducted, says Homi Mistry.

TDS will be deducted at 1% if total consideration paid on transfer of immovable property, including payments such as club membership fees, maintenance fees, advance fees, car parking fees, electricity, and water facility, exceeds ₹50 lakh.

3) Interchangeability of PAN and Aadhaar: Where a person’s Aadhaar number is linked to his PAN, he/she is free to quote his Aadhaar number instead of his PAN. And where a person has not been allotted a PAN, he/she can quote his Aadhaar number instead of PAN and such person shall be allotted a PAN.

4) TDS on cash withdrawal: TDS @2% will be deducted by a bank or co-operative bank or Post Office on cash withdrawals by any person in excess of ₹1 crore in aggregate during the financial year.

Source : Livemint