Budget 2019 India: With tax collections increasing over the years, the government has shifted focus on the super-rich for mobilisation of revenue. There is a surcharge on taxpayers having taxable income from `2 crore to `5 crore, and `5 crore and above, with effective tax rates moving up to 39% and 42.74%, respectively. The Budget also continued its focus on promoting digitalisation and ease of compliance.
With the objective of Housing for All, additional tax deduction of up to `1.5 lakh has been proposed for interest paid on housing loan borrowed up to March 31, 2020. This is for purchase of a residential house up to the value of `45 lakh.
In a move to encourage EVs, the government proposed tax deduction of `1.5 lakh on the interest paid on vehicle loan (sanctioned during the period April 1, 2019, to March 31, 2023). This move would bring in volume efficiency and more affordable EVs.
On digitalisation, assessments will be carried out electronically in a phased manner without disclosing the details of assessing officers. This faceless model is intended to reduce the difficulty faced by taxpayers. To discourage cash payments, the government has proposed to levy TDS of 2% on cash withdrawals exceeding `1 crore from a bank account.
To provide ease of compliance, the government has proposed interchangeable use of Aadhaar and PAN, where individuals not having a PAN may file tax returns quoting Aadhaar. Also, NRIs with Indian passports may obtain Aadhaar after their arrival in India without waiting for the 180-day period.
Withdrawal of lump sum amount from NPS would now be exempt from tax up to 60% from the earlier 40%. To ensure central government employees receive the benefit of enhanced contribution, it has been proposed to increase the deduction of employer contribution threshold from 10% to 14%. Further, to have multiple options of tax investments available under NPS, deduction under Section 80C would cover contribution made under tier-II account for central government employees.
The government has proposed some changes with a view to widen the tax base, such as mandatory furnishing of return of income by persons having certain prescribed transactions like deposit of cash exceeding certain limit, expenditure on foreign travel exceeding certain limit, etc; gift by a person resident in India to the one outside India to be considered as deemed to accrue or arise in India; rationalisation of the Black Money Act by widening the scope of definition of assessees, etc.
With the objective of “minimum government, maximum governance,” this government is on the path of making necessary changes towards digitalisation, bringing the regime of differentially taxing the super-rich and stringent provisions against non-compliance.
(The author is Tax Partner & India Mobility Leader, EY. With inputs from Shanmuga Prasad, director, EY)