Key changes to watch for the New Financial Year 2019-2020

2019-20 is going to be a big year for taxpayers. Many tax sops have been announced by the government both under Income tax and GST – which greatly helps in reducing your tax outgo if planned effectively. So we bring you all the key changes you need to be aware of so you could meticulously plan for your taxes this year.
For Individuals
1. Income tax rebate has been increased to Rs. 12,500/- from Rs. 2500/-. Which means effectively there is no tax upto a taxable income of Rs. 5 lakh p.a.
2. Last year the government announced a standard deduction of Rs. 40,000 for all salaried employees. From this year, it will increase to Rs. 50,000. Which means a flat Rs. 50,000 can be claimed as a deduction, without providing any additional proof for the same.
3. If you own two houses, there is no deemed income on the second house from this year on. Earlier, when two houses are owned, the second house was deemed as a let out property, and notional rent was charged to tax. However, from this year on, you can effectively claim 2 houses as Self-occupied properties.
4. Banks and other financial institutions need not deduct TDS while paying interest to upto Rs. 40000/- per annum. (Earlier they used to deduct when interest crosses Rs. 10,000 per annum)
5. The dream of owning a house may come true for many this year. The government has reduced the GST rates on affordable houses to 1% and other houses to 5%. (Earlier it was 18% on all houses)
For Businesses
1. A big relief from Angel tax
Earlier premium collected by companies on the issue of shares was taxable unless the fair value of those shares were estimated by a Merchant banker. As a big relief for start-ups, the government has exempted Start-ups Registered under Start-up India exempt from this, if a specific application is made. Further, the government has widened the scope of the definition of start-up to include companies operating for 10 years (earlier 7 years), and with an annual turnover not exceeding Rs.100 crore (earlier 25 crores)
2. Big relief to MSME companies
As a big relief to MSME companies, mandatory registration for GST is applicable only when turnover exceeds Rs. 40 lakh, in case, if an entity is dealing with goods. (Earlier it was Rs 20 lakh in many states, and Rs. 10 lakh in northeastern states). However, entities providing services should continue to get registered if turnover exceeds Rs. 20 lakh.
3. Composition scheme
Composition scheme is now open for small service providers too. Earlier composition scheme was available only for manufacturers and traders, where they can charge 1% GST without taking an input tax credit. Now, for the benefit of small service providers, the government has opened this composition scheme for the service providers, where they can charge only 6% GST without taking an input tax credit. However, annual turnover from services in the previous year should be less than 50 lakh to opt for this scheme.

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