9 Tax changes that impact your financial plan for FY 2019-20

Here are 9 changes you should keep in mind while making a new financial year plan.

Your financial plan for the new financial year, i.e., 2019-20 should be kept in mind for all the changes in the personal finance scenario that is applicable from April 1 this year.


So here are 9 tax and other important changes that you have to keep in mind for this financial year:
1. Zero tax on taxable income up to Rs 5 lakh  
2. Standard deduction limit hiked to Rs 50,000 
3. No income tax on notional income from second house  
4. TDS threshold limit hiked to Rs 40,000  
5. New GST rules and rules for housing sector 
6. External benchmark to decide interest rates on loans   
7. Investing capital gains in two houses  
8. Reporting of LTCG gains from equity in ITR
9. No transfer of physical shares from April 1, 2019. 

1. Zero tax on taxable income up to Rs 5 lakh :

As per Interim budget 2019, you dont have required pay any Tax if your taxable income does not exceed Rs 5 Lakh for financial year 2019-20, Except in few specific cases.

As the Interim Budget has been announced in 2019, taxable income up to Rs 5 lakh in a financial year will be able to avail the full tax rebate and there will be no need to pay any tax on this income. After the financial year 2019-20, tax exemptions available under section 87A have been increased to Rs. 12, 500.

However, you still have to file your Income Tax Return (ITR). According to income tax laws, it is mandatory to file an ITR if your total income exceeds the minimum exemption limit.

Taxable income of more than Rs 5 lakhs can be utilized for various deductions such as Section 80C, 80D of Income Tax Act and other allowances like House Rent Allowance (HRA), Leave Travel Alliance (LTA) (tax-free) ) To some extent) to reduce its taxable income and thus take advantage of tax rebate.

Remember, after claiming all tax-saving deductions, if your taxable income is still more than Rs. 5 lakhs, then you will be liable to pay income tax as per current rates.

2. Standard deduction limit hiked to Rs 50,000 :

In order to help you save more tax in the new financial year, in the interim budget 2019, the standard deduction in salary has been increased from Rs. 40,000 to Rs. 50,000 and increase of Rs. 10,000.

In the budget 2018 instead of transportation allowance and medical reimbursement, standard deduction was introduced for the first time. This deduction is available for all salaried class and pensioners. The deduction claim is made at the time of filing your income tax return.

3. No income tax on notional income from second house : 

From FY 2019-20, people with a second house, lying vacant will not be required to pay any income tax on the notional rent from this house. Till FY 2018-19, an individual having a second house which was not let out was required to calculate notional rent and pay tax on it accordingly. The notional rent is the amount of the rent which the individual would have earned if the house was let out by him.

First, if the person possessed more than one house property, then he could have considered the property of any one house as 'self-occupied' and the tax on the property of the other house was necessary, whether Is it really rent or not?

4. TDS threshold limit hiked to Rs 40,000 : 

Taxpayers with income below the taxable limit were earlier required to submit Form 15G in order to avoid TDS on the interest income from bank. In a bid to provide relief to such tax payers, the TDS limit has been hiked to Rs 40,000 from Rs 10,000 earlier. This change is expected to reduce paperwork for people in the lower income brackets.

However, no one should confuse it with the taxation of interest income earned from the banks.

An increase in the TDS limit will mean that no TDS will be deducted by the banks for interest income up to Rs 40,000. However, according to current tax laws, interest income will be taxable.

Interest income on fixed deposit held with banks is still taxable, whereas the tax-saving deduction under Section 80TTA can be claimed for the interest income earned from the savings account either held with a bank or post office.

5. New GST rules and rules for housing sector : 

According to the announcement made by the GST Council in its 33rd meeting held on February 24, 2019 and thereafter, new rates for goods and services tax (GST) for the real estate sector will be effective from 1st April, 2019.

From April 1, 2019, for under-project projects under construction, developers and builders will have the option of charging GST according to the old rates, i.e., 12 percent (with input tax credit) or new rates on 5 Percentage (without input tax credit)

In case of affordable housing, such rates will be 8% (with input tax credit) or 1% (without input tax credit). Any new construction project starting from 1st April, 2019 will essentially recover GST as per new rates.

Apart from this, the Council has defined what types of homes will come under affordable housing category. According to the new definition, an affordable housing is a residential house / flat in which non-metropolitan cities / towns have a fixed area of ​​90 square meters and 60 crores in cosmopolitan cities up to 45 lakh rupees. Metropolitan cities are limited to Bangalore, Chennai, Delhi NCR (Delhi, Noida, Greater Noida, Ghaziabad, Gurgaon, Faridabad), Hyderabad, Kolkata and Mumbai (full MMR). The previous limit for affordable housing was a uniform area of ​​60 square meters for a house.

Therefore, while buying a flat in an on-going real estate project, you need to check what is the GST rate charged by the builder/developer.

6. External benchmark to decide interest rates on loans :

The Reserve Bank of India (RBI) in its bi-monthly monetary policy meet held in December 2018 announced that all new floating rate personal or retail loans such as housing, auto etc and to micro and small enterprises would be linked to an external benchmark. Till now loans were linked to an internal benchmark, i.e., marginal cost of funds based lending rate (MCLR), prime lending rate (PLR) and benchmark prime lending rate (BPLR).

However, the statement said that the link to the external benchmark will be effective from April 1, 2019, however, the central bank has yet to issue the final guidelines in this regard. It is yet to be seen how the banks will implement this new rule. Linking the interest rates to the external benchmark, with changes in the prevailing rates in the economy, changes in rates are expected to increase transparency.

7. Investing capital gains in two houses  :

The taxpayers who have sold their property will now have the option of investing long term capital gains (LTCG) in two houses instead of one to avoid paying LTCG tax on the invested amounts. However, one must remember that this benefit can be raised only when capital gains are not more than 2 crores and can be used once in a lifetime.

8. Reporting of LTCG gains from equity in ITR :

LTCG Tax on Equity Shares and Equity Oriented Mutual Funds was announced in Budget 2018. Therefore, if you have sold equities and / or units of equity-oriented mutual funds in FY2018-19, which was held for more than a year, you will pay tax on these transactions while filing ITR for FY2018-19 And have to report. This ITR is due to being filed in finance which has just begun, i.e., in the financial year 2019-20

If the profit is more than Rs. 1 lakh in FY 2018-19, LTCG will attract tax rate of 10 percent without indexation profit.

9. No transfer of physical shares from April 1, 2019 :

The Securities and Exchange Board of India (SEBI) had announced last year that the transfer of physical shares will not be allowed from December 5, 2018. However, this deadline was extended up to April 1, 2019, because a large number of shareholders were still holding shares in physical Form. Therefore, according to the orders of the previous SEBI, from 1st April, the transfer of shares will be allowed only in dematerialized form.