Changes took place in the personal taxation in 2019 when many voices were behesting for revamp in tax slabs. Although no alteration were made in tax slabs but major declarations including the extension of tax rebate for individuals with income up to INR 5 lakh, hike in the standard tax deduction to INR 50,000 from INR 40,000 for salaried individuals and Tax Deducted at Source (TDS) threshold on interest from deposits in Bank/Post Office from Rs 10,000 to Rs 40,000, were announced by the government.

These changes are beneficial for salaried people & pensioners and help them save more tax. On another note, the super-rich suffered because of such changes. Here are top income tax changes which were announced in the year 2019.

CBDT Notified PAN-Aadhaar Interchangeability

Central Board of Direct Taxes - An apex body for direct taxes issued a notification regarding interchangeability between permanent account number (PAN) and Aadhaar number. This notification was issued in the wake of FM Nirmala Sitharaman’s announcement in her maiden budget that Aadhaar number can be quoted instead of PAN wherever it is mandatory to furnish PAN.

Noteworthy Points:

• More than 100 forms and returns have been amended by CBDT.
• Now, the taxpayers can quote Aadhaar number in forms such as Form 15G, Form 15H and so on.

No Tax on Taxable Income less Than INR 5 Lakhs

Interim Budget in February 2019 declared no tax liability for individuals with taxable income less than or equal to INR 5 lakh.

This was a big declaration as it takes into account major part of fresh working professionals as well as first-time taxpayers.
According to the announcement, if the net taxable income of an assessee does not surpass the limit of INR 5 lakh, then the assessee will not be liable to pay any tax and he is eligible to claim tax relief u/s 87A.

Noteworthy Points:

• It is mandatory to file an income tax return in order to claim the tax relief.
• The amount of tax benefit u/s 87A has been increased from INR 2,500 to INR 12,500.

Tax-Free Withdrawal From NPS

NPS has been made more tax-friendly by the Government of India (GOI) so it brought glad tidings for the citizens who invest in the National Pension Scheme (NPS).
GOI has made 60% of the lump-sum amount which an investor is allowed to withdraw on maturity - completely tax-exempted. Earlier, merely 40% of the corpus was tax-free.

Noteworthy points:

• Upon retirement, NPS investors have to use 40% of the corpus to buy an annuity.
• Only 60% of the corpus will be allowed to be withdrawn at the time of maturity and the whole 60% is now tax-free.

Increase in TDS Threshold to INR 40,000
The TDS (tax deducted at source) threshold has been increased from INR 10,000 to INR 40,000. This is good news for taxpayers who fall under lower-tax bracket like housewives.

Noteworthy Points:

• The TDS threshold for post-office and bank deposits has been increased from INR 10,000 to INR 40,000.
• Small taxpayers will not have to submit Form 15G when the total income from interest is not more than INR 40,000.

The Standard Deduction Raised to INR 50,000

The standard deduction limit has been hiked to INR 50,000 from the current limit of INR 40,000 - another tax-saving move for the salaried class.
Union Budget 2018 introduced the benefit of Standard deduction from salary in lieu of medical reimbursement and conveyance allowance which were two common tax-free components of salary structure of an individual till FY 2017-18.

Noteworthy Points:

• This benefit of the standard deduction is available for salaried class
• Pensioners can also claim this benefit if their pension amount is taxable under the “salary” head.

Investment of LTCG From One House Into Two Houses
Long term capital gains from the sale of one house are now allowed to be invested into two residential houses, subject to some conditions.

According to the previous income tax laws, an individual was allowed to save tax on LTCG generated from the sale of the house by making an investment of the same in one new house property.

Noteworthy Points:

• This benefit is allowed only when the LTCG from selling a house is not more than INR 2 crore.
• This benefit can be availed only once in a lifetime by an individual.

Increased Tax-Benefit on Purchase of An Affordable House
A tax benefit of INR 1.5 lakh on the interest paid towards a housing loan was declared u/s 80EEA of the Income Tax Act, 1961.
Additionally, the benefit is offered on the tax benefit of INR 2 lakh which can be availed on the interest paid u/s 24, summing up the total tax exemption up to INR 3.5 lakh for FY 2019-20.

The benefit u/s 80EEA is subject to some conditions which are as follows:

• Availment of housing loan in the period between April 2019 to March 2020.
• Evaluation of the house property at not more than INR 45 lakh.
• The taxpayer is not owning any house during the sanctioning of the loan.

Higher Surcharge For Super-rich
Budget 2019 hiked the surcharge by up to 22% for the super-rich.
To collect more tax from the super-rich, the GOI has hiked the rate of surcharge for individuals with taxable income:
> INR 2 crores < INR 5 crores
and
> INR 5 crores.
Individuals earning between INR 2 -5 crores will have to pay an additional surcharge of 25% and individuals earning more than INR 5 crores will have to pay a surcharge of 37%.
Noteworthy Points:

• This surcharge will be leviable on income other than from capital gains.
• The previous surcharge of 10% or 15% will be applicable to capital gains from the stock market.
• New surcharge rates will be applicable on income from all other sources like salary, interest, rent, etc.

Mandatory Filing of ITR For Some Cases
Budget 2019 mandated the filing of ITR for some cases. Earlier, ITR filing was mandatory only when the total income of an individual was above the basic exemption limit.
The cases when ITR is mandatory as per Budget 2019 are as follows:

• When the expenditure on foreign travel by the individuals is more than INR 2 lakh in a fiscal year.
• When the electricity expense/bill paid by the individuals in a year is more than INR 1 lakh.
• When the individuals depositing in a current account in a year is more than INR 1 crore.
• When the individuals claiming a capital gain exemption (u/s 54/54F) which brings them within the exemption purview

TDS on Payments Made To Contractors
TDS deduction at 5% became mandatory on the commission, brokerage or payments made to a contractor or professional when such payments exceed INR 50 lakhs in one fiscal year.
Noteworthy Points:

• This TDS should be deducted while making payment of the sum or crediting the amount.
• The tax deducted should be deposited by an individual along with a challan-cum-statement in Form 26QD, within 30 days from the last date of the month in which the TDS was deducted.

TDS on Parking Charges, Maintenance Fees
Budget 2019 brought payments like parking fees, club membership fees and other similar charges paid while buying a house under the purview of TDS. Now, such payments have to be considered while determining the amount of TDS to be deducted.
Previously, such charges like car parking fees, club membership fees, electricity & water facility fees, advance fee, maintenance fee, etc. were not required to be included in the cost of buying property amount to calculate the TDS to be deducted while buying property.

Budget 2019 brought welcome news for salaried class and low-bracket income earners where pensioners are no exceptions. However, to collect more taxes to meet the revenue targets, surcharge rates for super-affluent taxpayers were increased.
Overall, the changes were quite easy to accept & implement and certainly beneficial for low income earner, new professionals, pensioners, etc. The simplicity and ease related to return filing, augmentation of revenue base from tax and more relief for taxpayers are approaching materialisation as the new year 2020 is faring forward.