1. ANALYSIS OF UNION BUDGET 2019-20
RAJEEV SOGANI
R SOGANI & ASSOCIATES 1

2. IMPETUS TO START-UPS

3. IMPETUS TO START-UPS
Changes in Section 54GB: Roll Over Benefits to incentivize investment in Start-Ups
Section 54 GB provides for exemption of Long Term Capital Gain on sale of residential property if such amount is invested in equity shares of eligible start-ups up to 31/03/2019 .
Changes in the conditions to avail this exemption are as follows:
Conditions
Old
Amended
Last date of transfer i.e. Sunset date.
31/03/2019
31/03/2021
Minimum share holding required
50%
25%
Lock in period on transfer of new asset being computer & computer software
5 Year
3 Years

4. IMPETUS TO START-UPS
Substitution of Section 79: Carry forward and set off of losses in case of Start-Ups
S No.
Conditions
Pre-Amendment
Post- Amendment 1.
All the shareholders holding shares in the prior year in which losses were incurred shall continue to hold those shares at the end of such previous year.
To be complied with.
Either 1 or 2 have to be complied with. 2.
The shares of the company carrying > 51% of the voting power are beneficially held by persons who beneficially held shares of the company carrying > 51% of the voting power on the last day of the year or years in which the loss was incurred.
N.A. 3.
Such losses must have been incurred during the period of seven years beginning from year in which such company was incorporated.

5. SECTION 56(2)(VIIb)- EXTENDED EXEMPTION
Where a closely held company receives consideration for issue of shares from any person, being a RESIDENT, in any P.Y., and where the consideration exceeds Face Value of such shares, then :
Consideration Received – FMV of the shares
is taxable as “income from other source”
Provided that, the provision shall not apply when consideration is received by a Venture Capital Undertaking from:
Pre-amendment
Post-amendment
Category I AIF: It includes-
Venture capital funds
SME Funds
Social Venture Funds
Infrastructure funds
1. Category I AIF, and
2. Category II AIF :
Real Estate Funds
Private Equity Funds
funds for distressed assets

6. CHANGES IN REAL ESTATE SECTOR

7. INCENTIVE FOR HOME BUYERS – INSERTION OF NEW SECTION 80EEA
Deduction
Deduction of interest up to Rs. 1.5 lacs on loan taken for Residential House Property from any Financial Institution.
Eligibility Conditions
Loan shall be sanctioned during 01/04/2019 to 31/03/2020.
Stamp Duty Value of Property shall not be more than Rs. 45 lacs.
Assessee should not own any other house property.

8. MODIFICATION IN CONDITIONS FOR DEDUCTION U/S 80-IBA
Section 80-IBA provides for deduction of 100% of the profits derived from business of developing and building housing projects subject to certain conditions.
Condition
Earlier
After Budget 2019
Maximum Carpet Area of residential unit in the
housing project -
30 Sq. mts in metropolitan cities.
60 sq. mts for cities other than above.
60 sq. mts in metropolitan cities.
90 sq. mts for cities other than above.
Stamp Duty Value of such residential unit -
-No such condition earlier-
Shall not exceed Rs. 45 lacs.

9. NEW PROVISIONS FOR ELECTRIC VEHICLES

10. ELECTRIC VEHICLE: ADDITIONAL DEDUCTION ON INTEREST –SECTION 80EEB
Applicable to an Individual Assessee for interest paid from 1st April, 2019.
Loan should have been sanctioned between 1st April, 2019 to 31st March, 2023.
Deduction is limited to Rs. 1,50,000 and no other deduction shall be allowed in respect of such interest.

11. AMENDMENT IN SECTION 139 – Requirements for Filing Return of Income

12. NEW REQUIREMENT FOR FILING RETURN FOR INDIVIDUALS/HUFs
Deposit of an amount > Rs. 1 crore in aggregate in one or more current accounts maintained with bank.
Foreign Travel Expenditure > Rs. 2 Lakh for himself or any other person.
Consumption of Electricity for an amount > Rs. 1 Lakh.
Other conditions as may be prescribed.

13. TDS COMPLIANCE

14. TDS ON CONTRACT & PROFESSIONAL SERVICES
Individual/HUF in ambit of TDS – Insertion of section 194M w.e.f. 1st September, 2019
Current Provisions:
Currently, there is no liability of TDS on Individuals/HUFs on payment made to resident contractor or professional if:
It is for Personal Use, or
Individual/HUF is not subjected to audit.
Insertion of new section 194M:
Who: It is now proposed to cover the above category of Individuals/HUFs.
What: Applicable to transactions with any resident involving contract work or professional services with amount > Rs. 50,00,000.

15. TDS ON CONTRACT & PROFESSIONAL SERVICES
Insertion of new section 194M (cont..): 5%
When: Applicable on payment or credit, whichever is earlier.
Points to be noted-Section 203A is not applicable:
To reduce compliance burden Section 203A does not apply, which means that TAN is not required for deposition of tax deducted, PAN will be sufficient. Other compliances w.r.t furnishing of statements (s. 200), statements (s. 203) and returns (s. 206) are applicable.

16. TDS U/S 194-IA: INSERTION OF EXPLANATION
Inclusions in definition of ‘Consideration for Immovable Property’ w.e.f. 1st September, 2019
Current Provisions:
Section 194-IA levies 1% of amount of consideration for immovable property on transfer of certain immovable property other than agricultural land.
The term consideration for immovable property is presently not defined.
The buyer is bound to make a number of contractual payments besides the sales consideration, which is not being considered in levy of TDS.

17. TDS U/S 194-IA: INSERTION OF EXPLANATION
Amendment:
Following charges shall be included in the term ‘Consideration for Immovable Property’ and thus, TDS will be levied on the same:
Club membership fees
Car parking fees
Electricity or Water facility fees
Maintenance fees
Advance fees
any other charges of similar nature, which are incidental to transfer of the immovable property.

18. NON-RESIDENTS

19. DEEMED ACCRUAL OF GIFT MADE TO A NON-RESIDENT
Any money or property situated in India under such transfer by way of gift shall be taxable after 5th July 2019.
This transaction will be taxable in the hands of non-resident subject to exemption of Section 56(2)(x).
Gift to Friend
Resident
Non- Resident

20. SECTION-9 Income Deemed to Accrue or Arise in India
This section deems the income of a non-resident to accrue or arise in India if he receives income from the Government, Resident or Non-resident for purpose of business or profession carried out by such person by way of:
Royalty 2. Fees for Technical Services Interest
Post-Amendment
If any resident transfers to a non-resident any:
Sum of money: more than Rs. 50,000, or
Immovable Property: whose Stamp duty value or Fair market value is more than Rs. 50,000.
after 05/07/2019 , it shall be deemed to be income under this section.

21. CASHLESS ECONOMY

22. OTHER MODES PRESCRIBED FOR MAKING PAYMENTS
Following are various provisions in the Act which prohibit cash transactions and allow payment or receipt only through account payee cheque, account payee bank draft or electronic clearing system through a bank account.
Section
Brief Description
13A
Political parties to receive donations exceeding Rs. 2,000
35AD
Expenditure of capital nature exceeding Rs. 10,000
40A
Any expenditure exceeding Rs.10,000
43(1)
“Actual cost”- Expenditure exceeding Rs. 10,000
43CA
Consideration for transfer of the asset
44AD
Presumptive Taxation
80JJAA
Deduction w.r.t additional employee cost
269SS
Accepting loans or deposits exceeding Rs. 20,000
269ST
Receiving amount exceeding Rs. 2,00,000
269T
Repayment of loans exceeding Rs. 2,00,000

23. OTHER MODES PRESCRIBED FOR MAKING PAYMENTS
At present there are few payment modes which were not covered under the ambit of the existing provisions. They are:
It is therefore proposed to allow such other electronic modes as may be prescribed, in addition to the existing permissible modes of payment, in the aforementioned sections.
Other electronic modes will be notified in due course.
Payment Wallets
Oxigen
ecoPayz
PayPal
Venmo
freecharge

24. TDS ON CASH WITHDRAWAL TO DISCOURAGE CASH TRANSACTIONS: SECTION 194N
Every bank; etc. shall deduct 2% on cash payments to account holder (i.e. on withdrawals for recipient) exceeding Rs. 1 crore from a single account in a previous year.
Deduction shall be made on the sum that exceeds Rs.1 crore.

25. MANDATING ACCEPTANCE OF PAYMENTS THROUGH ELECTRONIC MODES: SECTION 269SU
Applicable to every person whose turnover or gross receipts during immediately preceding previous year exceeds Rs. 50 crores.
Such person is required to provide facility for accepting payments through prescribed electronic modes, in addition to the existing electronic modes of payments, if any.
The above electronic modes will be notified in due course.
In case of failure to provide such facility, penalty of Rs. 5,000 per day can be imposed.
This section shall be applicable w.e.f 1st November, 2019.

26. Thank You!