Dear All Greetings Union budget for FY 2019-20 was presented by Hon'ble Finance Minister Nirmala Sitharaman . As most of you are aware, this budget is unique being first budget after election in 2019 In our endeavor of providing Industry, Trade and Professionals with timely update on changes in direct tax laws with detail analysis of the change, we herewith have compiled all the budget updates with respect to various direct tax laws and the same has been attached herewith.

1. BUDGET-DIRECT TAX
2019
CA Kaustubh Deshpande , Partner
Joshi Apte & Co. Chartered Accountants

2. Tax Proposal for Individual Taxation
 There are no changes in slab rates for individuals except 100% tax rebate allowed for taxable
income up to Rs. 5 Lacs
 Surcharge in case of every individual, HUF, AOP/BOI will be as follows:
 Above surcharge has cascading effect on the Health and Education Cess , being it is applied at
4% on tax plus surcharge. Hence Maximum marginal rate for AY 20-21 will be 42.744%
Taxable income slab Surcharge rate
Up to Rs.50 Lacs Nil Rate
Rs.50 Lacs- Rs.1 Crore 10% ( It is already, no change)
Rs. 1 Crore – Rs. 2 Crore 15%
Rs. 2 Crore – Rs. 5.Crore 25% (Newly proposed)
Rs. 5 Crore 37% (Newly proposed)

3. ………….Continued
 Tax exemption to an assessee on withdrawal of amount from National Pension System at the
time of closure or opting out of scheme increased to 60% from 40% . i.e. Now on withdrawal
40% amount will be taxable and 60% will be exempt at the time of closure or opting out of
scheme. Currently exemption is allowed only u to 40%.
 Relief / exceptions / exemptions will be prescribed to cases where unquoted shares are
transferred for considerations less than fair market value. Currently, in all cases the difference
between fair market value and consideration is taxable u/s 50CA, where unquoted shares are
transferred for consideration less than fair value.
 The sunset date for transfer of residential house property, for claiming exemption under section
54GB in respect of investment made in eligible start-ups , has been extended from March 31,
2019 to March 31, 2021

4. ………….Continued
 Additional deduction of Rs.1,50,000 of interest on loan taken from financial institution for the
purpose of acquisition of residential house property is allowed subject to following conditions :
• Loan is sanctioned beginning of 1st
April 2019 and ending on the 31st
March 2020
• Stamp duty value of residential property does not exceed Rs. 45 Lacs
• The assessee does not own any residential house property on the date of sanction
 Therefore, in above case assessee will be eligible to claim deduction of Rs.2,00,000 u/s 24b
being self occupied property and additional deduction of Rs.1,50,000 u/s 80EEA.
 In case of Individual, deduction of Rs.1,50,000 of Interest on loan taken from financial
institution for the purpose of purchase of an electric vehicle will be allowed u/s 80EEB.
Conditions are as follows:
 Deduction allowed from AY starting 01st
April 2020
 Deduction for loans sanctioned by financial institution during 1st
April 2019 and ending on 31st
March 2023
 Where deduction is claimed under this section, then deduction shall not be allowed in respect of such interest
under any other provisions of this Act .
 Above provision will be beneficial for salaried individuals, because self employed individual
are already availing deduction under Profits gains of Business and Profession irrespective of
electric car.

5. Proposals– Tax with-holdings
 Tax deduction at source in case of any sum received under life insurance policy other than
covered in exemptions in section 10(10D) is increased from 1% to 5%.
 Resident buyer of immovable property is required to deduct the tax at 1% of consideration for
immovable property, now bill has proposed to add explanation providing definition of
consideration , it is “ Shall include all charges of the nature of club membership fees, car
parking fee, electricity or water facility fee, maintenance fee, advance fee, or any other charges
of similar nature, which are incidental to transfer of immovable property”
 Any Individual or HUF ( Other than those who are already required to deduct tax u/s 194C and
194J) responsible for payment exceeding Rs. 50 Lacs to any resident for carrying out any
work ( including supply of labour ) and fees for professional services during financial year at
the time of credit or payment whichever is earlier deduct an amount equal to 5% of such sum.
 Provisions of section 203A shall not apply to a person required to deduct the tax in accordance with the provisions
of this section.
 It is effective from 1st
September 2019
 In case of aggregate withdrawal of cash exceeding Rs.1 crore , bank ,co-operative banks, post
office shall deduct tax at 2% on sums exceeding Rs. 1crore

6. Tax Proposal for Corporates
 Threshold limit for lower corporate tax of 25% has been increased from Rs.250crore to Rs.400
Crore. Therefore domestic companies not having turnover exceeding Rs.400 crore in FY 2017-
18 will be taxable at 25% basic tax rate for the AY 2020-21.
 Sec.40(a) – Effective from 1st
April 2020- Where assessee fails to deduct whole or any part of
the tax but he not deemed to be ab assessee in default u/s 201(1) the for this clause it shall be
deemed that the assessee has deducted and paid the tax on such sum.
 Interest on any loans borrowed from NBFCs taking deposits , systemically important non
deposit taking NBFC, deduction will be allowed only on actual payment basis. This interest
will be covered u/s 43B. Interest converted into loan or borrowing shall not be deemed to have
been actually paid. [Effective from 1st
April 2020]
 Simultaneously , Sec.43D has been amended, so that the interest on NPAs in case of NBFCs
and systemically important non deposit taking NBFC will be taxable only on receipt basis. It is
amended to provide a level playing field. [Effective from 1st
April 2020]

7. Tax Proposal for Corporates
 Sec.56 (viib)- Company in which public is substantially not interested, issues shares for
consideration in excess of face value is taxable except in cases of class or classes of persons
notified by the Central government in this behalf,
 Therefore, in relation to above clause proviso has been added that “ If company fails to comply with the
conditions provided in notification, then the consideration received in excess of face value will be taxable in the
hands of the company”
 In above sub clause word venture capital fun shall be substituted with “Venture capital fund or specified fund”
 The condition for carry forward and set off of losses in cases of eligible start-ups is proposed to
be relaxed enabling them to carry forward their losses on satisfaction of any one of the two
conditions, i.e. continuity of 51% share holding / voting power or continuity of 100% of
original shareholders. (Sec. 79 )
 Assessee engaged in business of developing and building housing projects can claim 100%
deduction of the profits and gains from the projects approved on or after 1st
September 2019
and complying with the conditions provided in Section 80-IBA in relation to project- like size,
cities, carpet areas, stamp duty value of residential unit etc. [ Incentive for promoting
affordable housing projects]

8. Tax Proposal for Corporates
 In order to discourage the practice of avoiding dividend distribution tax through buy back of
shares by listed companies, it is proposed to provide that listed companies shall also be liable to
pay additional tax at 20% in case of buy back of share , as is the case currently for unlisted
companies .[Sec.115QA effective 5th
July 2019]
 Dividend distribution tax exemption to International Financial Service Center [IFSC]
extended , currently it was for only dividend declared out of current profits now applicable for
dividend declared out of accumulated profits
 No additional tax on distribution of any amount , on or after 1st
September 2019, by a specified
Mutual Fund out of its income derived from transaction made on recognized stock exchange
located in any IFSC.
 Deduction u/s 80LA introduced for assessee being a scheduled bank, or, any bank incorporated
outside India as per their regulation ; and having offshore banking unit in SEZ will be eligible
for
 100% of such income for five consecutive assessment year beginning with the relevant previous year in which
permission or registration has been obtained under appropriate regulation
 Thereafter . 50% of such income for five consecutive assessment year


9. Tax Proposal for Corporates
 Companies under NCLT pursuant to resolution plan approved under Insolvency and
bankruptcy Code 216, where Board of Directors has been suspended by NCLT, provisions of
Sec.79 will not be applicable to carry forward losses .i.e conditions of continuity of
shareholding for carry forward and set off of losses shall not apply to such companies. It is also
proposed to provide that for the purpose of computation of MAT of such companies, aggregate
of brought forward losses and unabsorbed depreciation shall also be allowed as deduction.
 It is proposed that in case of Secondary adjustment (Transfer Pricing), assessee shall have
option to consider one-time payment of tax of specified amount, instead of interest payment
every year.
 It is proposed to extend the exemption u/s 56(2)(viib) to category II AIF as well.

10. Miscellaneous Tax Proposals
 It is proposed to provide that gifts of any sum of money, or property situated in India, by a
person resident in India to a person outside India( not being gift otherwise exempt), on or after
5th
July 2019, shall be deemed to accrue or arise in India. Presently, gifts made by a resident to
another resident are liable for income tax subject to some exemptions. (Sec.9)
 Even though, taxable income is lower than minimum exemption limit, in cases where person,
who has deposited more than Rs.1 crore in current account or who has spent more than Rs. 2
Lacs on foreign travel or who has spent more than Rs. 1Lacs on electricity then return filing is
compulsory for that person irrespective of taxable income.
 It is proposed to provide interchangeability of PAN and Aadhaar, to enable person who does
not have PAN to file its return using Aadhaar

11. THANK YOU
CA Kaustubh Deshpande
kaustubhdeshpande @Joshiapte.com
www.Joshiapte.com
Disclaimer
This material and the information contained
herein prepared by Joshi Apte & Co. intended
for clients and other chartered accountants
to provide updates under Union Budget 2019-20
on direct tax and is not an exhaustive treatment
of such subject. We are not, by means of this
material, rendering any professional advice or
services. It should not be relied upon as the sole
basis for any decision which may affect you or your
business