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Crucial changes to taxation laws come into effect from April 1. While one set relates to income tax, the other concerns the Goods and Services Tax.
Income tax
As announced in the interim Budget, there is no change in the slab/rate of income-tax, but only in the rebate system, and the new norms kick in from the assessment year 2020-21 — that is, financial year 2019-20 beginning April 1. The rebate is available for those with a taxable income between ₹2.5 lakh and ₹5 lakh.
Currently, they pay a tax of up to ₹13,000 (including the 4 per cent cess). In the new mechanism, this liability will be down to zero. For this, the tax-payer has to be under the TDS (tax deducted at source) regime, and must file I-T returns and claim the rebate.
According to the government, the new proposal will provide tax benefit of ₹18,500 crore to some 3 crore self-employed, small businessmen/traders, pensioners and senior citizens.
The other changes relate to the Standard Deduction and TDS threshold for interest and rent income.
For salaried persons, the Standard Deduction is being raised to ₹50,000 from ₹40,000. This will provide tax benefit of ₹4,700 crore to over 3 crore salary earners and pensioners.
For interest income (earned through deposits in banks and post office), the TDS threshold will be ₹40,000 against ₹10,000. Similarly, the TDS threshold for deduction of tax on rent will be ₹2.40 lakh from ₹1.80 lakh now.
Also, the new norm for exempting income tax on notional rent on a second self-occupied house comes into effect from Monday.
GST on flats
The Finance Ministry has already notified norms for levying lower GST on under-construction flats. The new rates are 1 per cent for affordable houses and 5 per cent for others. This reduced rate will also be applicable to projects that have allocated up to 15 per cent of the carpet area for commercial purposes (shops, offices, etc). There will be no input tax credit.
Ongoing projects must decide by May 10 whether to continue with the old scheme or to shift to the new rates.
The Ministry has also clarified that input tax credit will first be utilised to pay the integrated tax, and any remaining amount can be used to pay Central and/or State/Union Territory tax in any order. Experts say this will benefit all industries.
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