Final Changes in the Finance Bill – 2019: Orignal vis a vis Revised Bill

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Final Changes in the Finance Bill – 2019: Orignal vis a vis Revised Bill

Finance Bill -2019 is passed by the Loksabaha and waiting for approval by Rajyasabha and then president of India. However, there are some changes in the original bill as presented in the parliament on 5th July vis a vis one which is now passed by the Loksabha. Some new amendments are proposed as well as some amendments proposed earlier are now are removed.

Here is an easy compilation of the changes in the original bill vis a vis revised bill.

  1. Scope of TDS compliance by Individual / HUF further widened:
    Individuals and HUFs (not liable for tax audit) are proposed to be covered by TDS provision as a deductor. Finance Bill – 2019 has proposed that they shall deduct tax from sum payable to resident contractor, commission agent, broker or professionals.
    Final Finance (No. 2) Bill, 2019 as passed by Lok Sabha has further stretched the net of Section 194M so as to levy TDS on commission (not being insurance commission referred to in Section 194D) and brokerage also.
    Resultantly, now any Individual or HUF whose turnover or gross receipt from the business or profession doesn’t exceed the monetary limit prescribed as specified in Section 44AB shall be liable to do TDS under section 194M while making payment of commission (other than insurance commission referred to in section 194D) or brokerage also.
  1. Angel Tax concession to be withdrawn if start up fails to full the stipulations of DPIIT:An additional conditional is imposed on the investor in start up. Angel Tax will be charged if an eligible start-up subsequently fails to fulfill the stipulations of DPIIT’s notification. In the revised Finance (No. 2) Bill, 2019 as passed has provided that if a company after fulfilling the conditions of DPIIT’s notification, fails to comply with any of the conditions mentioned therein subsequently  then the difference between the issue price of the shares and fair market value of such shares shall be deemed as income of the company of the previous in which such failure takes place.  Resultantly, immunity will be revoked and the tax shall be levied on the difference between the issue price of shares and the Fair Market Value of shares and not the Face Value of shares.

    The most chronicle part is the applicability of penal provision on this clause. It is further proposed that when the exemption is withdrawn, it shall be deemed that the company has mis-reported the said income and will then result in penalty of an amount equal to 200% of tax payable on the underreported income shall be levied as per section 270A.

  2. TDS on cash withdrawals exceeding Rs. 1 crore from one or more accounts:
    Original bill has been requiring TDS if there is a withdrawal of more than Rs. 1 Cr from an Account. Finance (No. 2) Bill, 2019 as passed by Lok Sabha has replaced the words ‘from an account’ by ‘from one or more accounts’. Effectively, now for the purpose of calculation of threshold limit of Rs. 1 crore, the aggregate amount of cash withdrawn from one or more accounts during the previous year has to be considered. It means that if any person have more than one bank account with the bank in different branches then the bank will be required to aggregate of all the account taken together for complying with the TDS provision.  There were high expectations that certain exemption as well exceptions will be provided in the section itself. Nothing of this sort has happened in section 194M.

The final copy of the bill as passed by the parliament is attached herewith.

Final- FB2019 (3)

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