Changes in Income Tax/ GST (FY 2019-20)
As we are here towards the beginning of a new financial year, i.e., Financial Year 2019-20, it’s important to know about the provisions of law applicable from April 1st 2019. The Government had made various changes under Income-tax law and GST which shall be applicable from April 1, 2019.
Income tax
1. Section 87A rebate: The amount of tax rebate under Section 87A has been increased from Rs. 2,500 to Rs. 12,500. Further, it shall be available to a resident individual whose total income does not exceed Rs. 5,00,000.
2. Standard deduction from salary :The limit of standard deduction for the salaried class taxpayers has been increased from Rs. 40,000 to Rs. 50,000.
3. No deemed rental income on having two residential house properties: If an individual owns more than one self-occupied house property then only one house property as per his choice is treated as self-occupied and its annual value is computed as nil. The other house property is deemed to be let-out as per section 23 and a notional rent is computed and charged to tax under the head ‘Income from House Property’.
Section 23 has been amended with effect from 1/4/2019 to provide relief to the taxpayers by allowing them an option to claim nil annual value in respect of any two houses declared as self-occupied.
Though from F.Y. 2019-20, an assessee can claim annual value as nil in respect of two-self occupied house properties. However, there is no change in aggregate limit for deduction in respect of interest on housing loan. The aggregate deduction for interest on housing loan for both houses cannot exceed Rs. 30000 or Rs. 2,00,000.
4. Section 54 relief extended to 2 residential houses: Any long-term capital gains, arising to an Individual or HUF, from the sale of residential house property is exempted to the extent such capital gains are invested in another residential house property. The taxpayer is allowed to invest only in one residential house in India to claim section 54 relief.
From financial Year 2019-20, an assessee shall be able to claim exemption under section 54 even if he invests in two residential houses in India. However, this benefit shall be available where the amount of the capital gain does not exceed two crore rupees. Further, if the assessee exercises this option, he shall not be subsequently entitled to exercise the option for the same or any other assessment year, i.e., the assessee can exercise this option only once in a lifetime.
5. TDS on interest income: Section 194A deals with deduction of TDS on interest income other than interest on securities like interest on Fixed Deposits.
Section 194A has been amended to ease the burden of compliance by way of increasing the threshold limit from Rs. 10,000 to Rs. 40,000 for deduction of tax at source on interest income, other than interest on securities, paid by a banking company, co-operative society or a post office
6. TDS on rental income; The threshold limit for deduction of tax at source under section 194-I on rental income has been increased from Rs. 1,80,000 to Rs. 2,40,000.
7. Amendment to DTAA with Singapore and Mauritius
Protocols with Mauritius and Singapore were signed in year 2016 to tax capital gains. The protocol gave India the right to tax capital gains on transfer of shares of an Indian Company acquired on or after 1 April, 2017. Up to March 31, 2019 tax rates on capital gains is charged at 50% of the prevailing domestic rates. With effect from April 1, 2019 capital gains shall be charged at full domestic tax rates.
GST
1. New Scheme is now available @ 6% to Intra-State Suppliers of Goods or Services.
A new scheme has recently been introduced wherein an Intra-State supplier can now pay GST at the rate of 6% (3% for Central and 3% for respective State) on first supplies of goods or services for Rs. 50 lakhs.
With effect from April 1, 2019 the benefit of this scheme can be availed. This scheme shall be available only if the aggregate turnover of supplier does not exceed Rs. 50 lakhs during the previous financial year. This has been made effective vide Notification No. 02/2019 – Central Tax (Rate) dated March 7, 2019.
The benefit of this scheme shall not be available to service providers who are rendering services in multiple States or through e-commerce websites. Thus, Chartered Accounts, Architects, etc. may not avail, this scheme if they have clients in different States.
2. Threshold Limit for composition scheme has been increased to Rs. 1.5 crores
The existing threshold limit on gross turnover in previous financial year to avail of the composition scheme has been increased from Rs. 1 crore to Rs. 1. 5 crores. In respect of special category States (North-Eastern States), the threshold limit has been increased from Rs. 50 lakhs to Rs. 75 lakhs. Consequently, the taxable persons can substantially reduce their compliance burden as they would be required to file GST returns on quarterly basis instead of monthly basis. This benefit has been extended vide Notification No. 14/2019 – Central Tax dated March 7, 2019 and this notification shall come into force from April 1, 2019.
3. Threshold limit to take registration has been increased to Rs. 40 lakhs
As per Section 23 of the CGST Act, every person is required to obtain the GST registration if his turnover from supply of goods or services exceeds Rs. 20 lakhs. This threshold limit has been increased to Rs. 40 lakhs only if supplier is engaged in supply of goods. In other words, any person who is engaged in supply of goods and his total turnover in the current financial year does not exceed Rs. 40 lakhs, he is not required to take registration under GST. This exemption from GST registration is subject to various conditions, inter alia, he is not making any Inter-State supply, he is not a non-resident taxable person, etc. This has been made applicable by Notification No. 10/2019 – Central Tax dated March 7, 2019 and this notification shall come into force from April 1, 2019.
4. Due dates for filing of GSTR-1 and GSTR-3B have been announced
The due dates for filing of GSTR-1 and GSTR-3B for the months of April, May and June of 2019 have been notified, which shall be as follows:
In case of GSTR-1: Quarterly- 31.07.19 and Monthly- 11th of succeeding month.
In case of GSTR-3B: 20th of the succeeding month
5. Option to opt for Composition Scheme
Any registered person who wants to pay tax under Composition Scheme for the F.Y. 2019-20 shall file an intimation, duly signed and verified, on the GST common portal, latest March 31, 2019.
6. Last chance to avail Input Tax Credit relating to F.Y. 2017-18
The registered person can avail input tax credit of GST paid from July, 2017 to March, 2018, latest by the due date of furnishing the return for the month of March, 2019 i.e. by April 20, 2019. Legal wording can also be referred to removal of difficulty order no. 2/2018 dated 31.12.2018.
7. Availing benefit of reduced GST Rates by real estate developers or builders
The GST Council in its 33rd and 34th meeting had recommended the GST rate of 1% in case of affordable houses and 5% in other cases, without input tax credit. The promoters shall be given an one -time option to continue to pay tax at the old rates (i.e., at 8% or 12% with ITC) on ongoing projects (if construction and actual booking have started before 01-04-2019) which have not been completed by March 31, 2019.The option shall be exercised once within a prescribed time frame and where the option is not exercised within the prescribed time limit, new rates shall apply.
However, new tax rates in real estate sector are recommendations of the GST Council and date of applicability of new tax rates have not been notified yet.
8. Due date to file Form ITC-04 for Goods sent to Job-worker.
The last date to furnish a declaration in Form GST ITC-04 in respect of goods dispatched to the job-worker or received from a job-worker during the period from July, 2017 to December, 2018 is March 31, 2019 vide Notification No.-78/2018-Central Tax dated December 31, 2018.
9. Benefits related to Specific Industry
(a) Money changer (Forex Dealer); or
(b) Air travel agent; or
(c) Dealer of second hand goods opting for ‘Margin Scheme’; or
(d) Taxpayer engaged in Life insurance business
Are given the option to determine the value of such supply as per rule 32 of the CGST Rules, 2017. It is suggested that the above mentioned eligible registered persons intended to determine the value of their supplies as per the valuation rules can exercise the option at the beginning of the Financial Year that is on or before April 1, 2019.
10. Availing Input tax credit by Banks, Financial Institutions or NBFC.
Banks or financial institution or NBFC have been given an option to avail 50% of the eligible Input tax credit on inputs, capital goods and input services. It is suggested that this option to be exercised at the beginning of the F.Y. that is on or before April 1, 2019 as the option once exercised cannot be withdrawn during the remaining part of the financial year.
11. Following Amendment Acts made applicable from February 1, 2019
(a) CGST (Amendment) Act, 2018
(b) IGST (Amendment) Act, 2018
(c) UTGST (Amendment) Act, 2018
(d) GST (Compensation to States) Amendment Act, 2018
Some of the Major changes are as follows:
(a) Manner of utilization of ITC has been amended by inserting Section 49A in CGST Act. Now the credit of IGST needs to utilized first fully for the payment of IGST, CGST, SGST and UTGST respectively.
(b) Section 9(4) relating to reverse charge applicability on purchases made by registered person from unregistered person is replaced and now it applies to specific class.
(c) Now only e-commerce operators who are required to collect tax at source under Section 52 of the CGST Act, 2017 are mandatorily required obtain GST registration.
(d) Composition dealers as per section 10 of CGST Act, 2017 are allowed to supply services to the extent higher of 10% of the turnover in the preceding financial year or Rs. 5 lakhs.
(e) Multiple GST registrations within same state for each place of business has been allowed. The concept of business vertical is done away with.
(f) Issue of consolidated debit/credit note is allowed in respect of multiple invoices issued in a financial year rather than single debit/credit note in respect of each invoice.
(g) The receipt of payment in Indian rupees which is permitted by Reserve Bank of India for services exported out of India, will be covered in the definition of ‘export of services’ as per the IGST Act, 2017.