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ITR filing: What are the new changes in tax laws that will come into effect from Sep 01?


New Delhi, Aug 30: Tomorrow, August 31, 2019, is the last day to file income tax return (ITR). If you still have not filed it do it on priority as the deadline would be extended.

ITR filing: What are the new changes in tax laws that will come into effect from Sep 1?

"It has come to the notice of CBDT that an order is being circulated on social media pertaining to extension of due date for filing of IT Returns. It is categorically stated that the said order is not genuine. Taxpayers are advised to file returns within extended due date of 31.08.2019," the income tax department said on Twitter.

Who should file Income Tax Returns?

The government mandates that individuals who earn an annual income of over Rs 2,50,000 must file a tax return before the deadline of 31 August.

DTC panel suggests cut in income tax, corporation tax

Documents required for filing ITR

a) PAN

b) Aadhaar

c) Bank account details

d) Form 16

e) Investments details

What happens if you file your ITR late?

You will have to pay a late fee of Rs 5,000 and Rs 10,000 if ITR is not filed by 31 August.

What happens if you do not file your ITR?

You may face a jail term from three months to two years for not filing your ITR. If the income tax dues are over Rs 25 lakh, you could end up with a jail term of up to 7 years.

What are the new main changes in tax laws that will come into effect from September 1 onwards?

TDS on additional payments made when purchasing immovable property

If you are buying a property, you will have to include the payment made for other services or amenities such as club membership fee, car parking fee, electricity and water facility fee and so on when computing the amount paid for the property for the purpose of deducting TDS.

Earlier, the tax was deducted by the buyer from the payment made during the purchase of the property. However, other payments were usually deducted from the total consideration while computing TDS.

TDS on cash withdrawals

Budget 2019 proposed that if an individual's Cash withdrawals exceeds Rs 1 crore on aggregate basis during the year from an account held with a bank, cooperative bank or post office will invite levy of 2 per cent TDS from September 1. The move is aimed at discouraging large cash transactions and also to promote a less cash economy.

For this, a new section 194N has been inserted in the Income Tax Act which defines that TDS will be levied at the rate of two per cent on cash withdrawals made from the account.

TDS on payments made to contractors and professionals

From September 1, t has been made mandatory for individuals and HUFs making a payment to contractors and professionals exceeding Rs 50 lakh per year will also be required to deduct TDS at the rate of 5 per cent.

For this purpose, a new section 194N has been inserted in the Income Tax Act .

TDS on net maturity proceeds of taxable life insurance policy

From September 1, if your life insurance maturity proceeds are taxable, then TDS will be deducted at the rate of five per cent on the net income portion.

According to Section 10 (10D) of Income Tax Act, maturity proceeds received from a life insurance policy are exempt from capital gains tax. But the same benefit will not be applicable for policies where the annual premium exceeds 10% of the sum assured. Prior to April 2012, this limit was 20%.

PAN-Aadhaar link

As per rules existing prior to changes, PAN would have become invalid if not linked with Aadhaar by a specified deadline. However, Finance Minister Nirmala Sitharaman in her maiden Budget proposed that PAN will now become inoperative but not invalid if not linked with Aadhaar by the specified deadline. This is nothing but to protect the validity of previous transactions done using the PAN.

PAN and Aadhaar Interchangeability

The government proposed that the PAN and Aadhaar card can be used interchangeably to file income tax returns. However, Aadhaar can be quoted in lieu of PAN only for certain prescribed transactions. The interchangeability of Aadhaar and PAN in ITR filing will come into effect from September 1.

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