Know These Seven Changes in Income Tax Rules that Come Into Effect from 1st September

Income tax related changes announced in the Budget generally come into effect from 1^st April but since the full Budget of 2019-20 was presented in July after the general polls there are some tax changes that will be applicable from tomorrow i.e. 1^st September. The rules that will change are related to TDS, PAN card & Aadhaar card, which may have a big impact on the lives of common people.

What are the New Changes in Income Tax Laws?

Let us know about the 7 rules, which will change from 1^st September:

TDS on additional payments will be charged when buying a house/property

From tomorrow, 1^st September 2019, while purchasing a property, you will have to include the payment made for other services / amenities like car parking fees, club membership fees, electricity and water connection charges etc when computing the sum paid for the home or asset for the purpose of deducting TDS.

TDS on withdrawal from bank account

If you withdraw over 1 crore rupees from your bank, post office or co-operative bank account in a financial year, then you will have to pay 2% TDS. For this, a new section 194N has been made in the Income Tax Act. The decision has been taken to discourage huge cash transactions & also promote a less cash economy.

TDS on payments made by individuals & HUFs to contractors / professionals

If an individual or HUF makes payments above 50 lakhs in a year to a contractor or professional, then he will also be required to deduct TDS at the rate of 5 %. People making payments over this limit for house renovation, marriage functions etc. to a single professional in a year will be required to deduct tax at the time of making the payment.

TDS on non-exempt part of life insurance

If life insurance maturity profits received by you are taxable in your hands, then the TDS will be charged at the rate of 5% on the net income portion. The net income portion can be defined as the total amount received less of total sum of insurance premium paid.

Banks & financial institutions could be asked to report even small transactions

So far banks & other financial institutions were required to report specified financial transactions if the amount goes beyond the threshold limit. In several reportable transactions, the limit has been Rs 50000 or above. All these transactions were to be reported to the IT department via a Statement of Financial Transactions or SFT required to be filed by all banks & FIs.

If Pan Card is not linked with Aadhaar card

According to rules existing before changes announced in Budget 2019, Pan Card will be invalid if it is not linked with the Aadhaar card within specified deadline. This will mean that if a person's PAN becomes invalid, it would be considered as the person never had a PAN.

Inter-changeability of Pan Card & Aadhaar

Another important announcement made in the Budget 2019-20 was inter-changeability of PAN & Aadhaar. The move will help improve tax compliance and make the life of taxpayer easier.