5 Changes in Income Tax Law wef Sept 1, 2019 | Section 194N | 194M | 194IA | 194DA |285BA| Taxpundit

In Income Tax law following amendments have become effective from 1st September, 2019.

1. Section 194N : It is applicable in case of cash withdrawals of more than Rs 1 crore during a financial year. This section will apply to all the sum of money or an aggregate of sums withdrawn from a particular payer in a financial year. The tax will be deducted by the payer while making payment to any individual in cash from a taxpayer’s bank account on the amount in excess of Rs 1 crore.

The limit of Rs 1 crore in a financial year is with respect to per bank or post office account and not a taxpayer’s individual account. For example, a person having three bank accounts with three different banks, he can withdraw cash of Rs 1 crore * 3 = Rs 3 crores without any TDS.

The payer will have to deduct TDS at the rate of 2% on the cash payments/withdrawals of more than Rs 1 crore in a financial year under Section 194N.

2. Section 194DA : TDS @ 1% is to be deducted on all Property Transactions which are above Rs. 50 Lakhs. This TDS is to be deducted on all types of Property Transactions irrespective of whether the property in consideration is a flat or a building or a vacant plot. TDS is to be deducted irrespective of whether it is a Residential Property or Commercial or Industrial Property. TDS is to be deducted on all types of property transactions except Agricultural Land. From 01.09.2019 onwards payments like Club Membership, Parking Fee, Maintenance Fee, Advance Fee, Electricity or Water Facility Fee etc need to be considered for the purpose of TDS u/s 194IA.

3. Section 194M : Any individual/HUF paying any sum to a resident, for carrying out any work (including the supply of labour) under any contract or by way of fees for professional services rendered during the financial year, exceeding Rs 50,00,000 in a year will have to deduct TDS at 5%. In case the PAN of the deductee is not available, then TDS will be deducted at 20%.

If they are required to get Books of Accounts audited, TDS deduction is applicable as per Section 194C, 194J and 194H. The individual and/or HUF who have to deduct TDS under these sections do not have to deduct tax at source under Section 194M.

4. Section 194DA : Any person who makes a payment to a resident Indian upon maturity of a life insurance policy will deduct taxes at source @ 5% w.e.f. 01.09.2019 under Section 194DA. Earlier rate was 1% which has been increased to 5% in Budget 2019.

5. Section 285BA : Government may prescribe transaction below current threshold of Rs 50,000 for furnishing of information u/s 285BA with effect from 01.09.2019.

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