Contents. Finance Act, Increase in standard deduction of salaried taxpayers

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1 Contents Amendments made by Finance Act, 2019 at a Glance I-13 1 Finance Act, Highlights of amendments made to income-tax provisions Relief to small taxpayers Standard deductions raised More relief for investment in residential houses Tds threshold increased 2 2 Increase in standard deduction of salaried taxpayers 2.1 What are the changes in standard deduction? What is the effective date of this increase in standard 4 deduction? 2.3 Is there any maximum salary limit for claiming standard 4 deduction? Is it applicable to taxpayers falling in higher tax slabs? 2.4 If total annual salary is ` 50,000, what will be the taxable 5 salary income includible in total income with effect from assessment year ? 2.5 If total annual salary is less than ` 50,000, will full standard deduction of ` 50,000 be allowed and resultant loss set off against income under other heads? 5 I-5

2 CONTENTS I Is the increased standard deduction of ` 50,000 applicable to retired pensioners? 2.7 Is the increased standard deduction of ` 50,000 applicable to family pension? Second self-occupied house exempted from tax on notional rent 3.1 What is self-occupied house? What is the nature of exemption given in respect of 2nd self-occupied house? 3.3 What is in respect of any two houses, declared as selfoccupied? Can a taxpayer declare as self-occupied even if not self-occupied? 3.4 Where assessee owning a vacant house in one city shifts to another city for job reasons and buys a house in the latter city. Whether he will get nil annual value for both houses? 3.5 What if in 3.4 above, the house in Pune is occupied by parents of Mr. X? 3.6 Is the exemption available to a taxpayer who owns more than 2 houses? Or is it available only to a taxpayer who owns only 2 houses? 3.7 If in 3.4 above, the data for the Delhi House and Pune House are as under and Pune house and parents of Mr. X reside in Pune 3.8 Whether assessee can treat one of the 2 self-occupied houses owned by him as self-occupied and the other as deemed to be let out? 3.9 If Mr. X owns more than two houses which are self-occupied, how to exercise the option in respect of two of those houses so that assessee saves maximum possible tax 3.10 A owns 5 houses. These houses are used by him for his residential purposes. These houses are not let out during any part of the previous year No other benefit is derived from these houses

3 I-7 CONTENTS 3.11 Assessee owns a self-occupied house in Mumbai where his family stays while he works in Delhi where he resides in a 1 BHK owned by him What if salary is ` 15,00,000 and other details same as per 3.11 above? 3.13 Will a taxpayer get separate ` 2 Lakhs limit for home loan interest deduction under section 24 of the Act for each of the two self-occupied properties (SOPs) with nil annual value declared by him? What happens if home loan interest of one SOP is ` 1,50,000 and for the other is ` 1,75,000? 3.14 What if in 3.13 above, interest on housing loan for one SOP is ` 1,30,000 and for the other it is ` 65,000? 3.15 How will changes made by Finance Act, 2019 affect an assessee with 2 self-occupied houses both of which have outstanding home loans on them? 3.16 If assessee anticipates home loan interest rates to rise in FY , is it advisable to prepay his home loan from a tax point of view? Will this benefit apply to corporates or firms owning flats? Is there any bar on an assessee availing the Nil annual benefit for his two self-occupied houses if both were purchased by him by availing once-in-a-life-time opportunity u/s 54 by investing in two houses? 22 4 Notional rent in respect of inventory not to be taxed upto 2 years What is the nature of relief given to assessees as regards notional rent from unsold inventory of property not actually rented out? 4.2 As the amendment is effective from AY , will it apply only to unsold inventory not let out whose completion certificate is issued on or after ? Or will it also apply to inventory for which completion certificates issued prior to FY ? 4.3 Will this benefit apply only to non-corporate assessees? Or will it also apply to corporate assessees?

4 CONTENTS I Whether the concession applicable to inventory in RERAregistered projects only? 4.5 Whether benefit applicable to unsold inventory of flats only? Or is benefit applicable to unsold inventory of shops also? 4.6 Whether flats for which completion certificate is received and which has been booked by customers and for which sale deed is pending execution shall be regarded as unsold inventory for the purposes of section 23(5)? One-in-life-Time benefit of exemption for long-term capital gains from sale of a residential house by investment in 2 residential houses in India 5.1 What is the one-in-life-time benefit of exemption for long-term capital gains from sale of a residential house by investment in 2 residential houses in India? 5.2 Will this benefit under section 54 apply to long-term capital gains from sale of residential plot? Whether transferred house may even be situated abroad? What if two or more houses sold and resultant capital gains in total is not exceeding ` 2 crores, can the same be invested in two houses in India to avail this one-time opportunity? 5.5 Suppose resulting capital gains from sale of a residential house is ` 1.95 cr. Assessee buys 3 houses in India. House A -- ` 1.25 cr. House B - ` 40 lakhs. House C -- ` 35 lakhs. What happens? 5.6 I have sold my old residential house in the month of November 2018 and resultant long-term capital gains in ` 1.75 cr. I have purchased a new house for ` 1.25 cr. Can I avail the benefit announced in budget by investing balance ` 50 lakhs in another residential house on or before ? 5.7 What if agreement to sell and to sell the old house entered into in current financial year? Will the once-in-life time opportunity to invest in 2 houses be available?

5 I-9 CONTENTS 5.8 What if agreement to sell in respect of old house entered into on and sale deed registry in buyer s name and possession to buyer completed in March 2019 and resulting long-term capital gains invested in two new houses in India on or before ? 5.9 What if in 5.8, the sale deed in buyer s name registered on and possession handed over to him on that date? 5.10 What if capital gains from transfer of old residential house is ` 2.5 crores and seller invests ` 2 crores in 2 residential houses in India and balance ` 50 lakhs in specified bonds under section 54EC? 5.11 Whether relief will be available in old residential house abroad is sold and resultant capital gains not exceeding ` 2 crores is invested in 2 houses in India? 5.12 Would the tax benefit be lost if total cost of both the houses in India in which capital gain is invested exceeds ` 2 cr? 5.13 Resultant long-term capital gains from sale of old house is ` 1.5 crores. The total investment in both houses in India is ` 1.3 crores. Can the balance capital gains of ` 20 lakhs be invested in section 54EC bonds to avail deduction under that section? 5.14 Splitting up of consideration between sale value of house and sale value of old furniture to ensure that capital gains from old house does not exceed ` 2 crores What should be the mode of taking payments by seller? What if seller invests his long-term capital gains from old 32 house of ` 1.98 cr. in two residential houses in India one for ` 1.30 cr. and another for ` 70 lakhs and fails to deduct TDS of 1% from cost of both these houses u/s 194-IA while paying to sellers of both these new houses? 5.17 Does once in lifetime means section 54 benefit can t be 32 availed at all later? 5.18 Is this once in lifetime opportunity under section 54 available 33 to Hindu Undivided Families? 5.19 When assessee sells one residential house and buys two in India with it and self-occupies both, will he have to offer notional rent of one of them to tax?

6 CONTENTS I If once-in-a life time opportunity availed in respect of house in own name, can it be separately availed in respect of house gifted to wife and standing in her name? 5.21 If once-in-life-time opportunity availed for house standing in own name, can it be subsequently availed for house standing in HUF name 5.22 What will be the lock-in-period for the 2 new houses purchased? 5.23 Does lock-in period mean absolute bar on sale or transfer of new houses bought under once in lifetime opportunity scheme? Tax incentives for builders of affordable housing 6.1 What is the benefit for affordable housing? 35 7 Full tax rebate if total income does not exceed ` 5 lakhs 7.1 What is the nature of benefit extended to small taxpayers whose total income does not exceed ` 5 lakhs? What will be the impact of this on resident individuals aged 80 and above (super senior citizens), residents aged 60 or more but less than 80 (senior citizens) and other individuals? 7.2 Has the zero tax slab been raised from ` 2.5 Lakhs (` 3 lakhs for residents aged 60 or more) to ` 5 lakhs? 7.3 How to determine whether one is eligible for 100% rebate of tax upto ` 12,500 under section 87A for total income upto ` 5,00,000? 7.4 If gross total income (i.e. income before deductions under Chapter VIA) exceeds ` 5 lakhs but after claiming deductions the total income reduces to ` 5 lakhs or below, will I be liable to pay any tax?

7 I-11 CONTENTS 7.5 What if, in the above example in 7.4, gross total income is ` 7,37,000 including savings bank interest of ` 12, The situation in 7.4 above is unjust. Just because total income exceeds ` 2,000 by a couple of thousand rupees, I have to fork out ` 13,416 additional tax. Any solution? 7.7 What if, in the example in 7.4 above, assessee has long-term capital gains from sale of listed equity shares where purchase and sale both have suffered Securities Transaction Tax and the same is ` 95, What if long-term capital gains in 7.4 above is ` 2,50,000 and total income other than LTCG is ` 4,90, Whether long-term capital loss from sale of listed equity shares to be reduced from total income for the purposes of eligibility for section 87A rebate? 7.10 Whether rent below ` 2,40,000 p.a. on which TDS not deducted is to be included in total income? 7.11 What if in 7.10 above the taxpayer were retired employee and pension were from ex-employer instead of family pension? 7.12 What if long-term capital gains from sale of old house after availing section 54 is NIL and total income does not exceed ` 5,00,000? 7.13 What if long-term capital gains after availing section 54 deduction is ` 1,00,000 in above case? Tds made less Tedious 8.1 Is there any relief to TDS deductors in their workload of cutting TDS from a large number of payments, depositing with Government, filing TDS returns and furnishing Form 16 and Form 16A? 8.2 How does the relief to small taxpayers ease work of TDS on payroll? 55 56

8 CONTENTS I Does enhancing TDS deducting threshold from ` 10,000 to ` 40,000 on interest earned on bank/post office deposits mean that interest upto ` 40,000 has become tax-free and need not be shown in ITR of taxpayer since no TDS deducted on it? 8.4 Does increase in TDS threshold for rent from ` 1,80,000 to ` 2,40,000 imply that since not TDS will be deducted on rent upto ` 2,40,000 p.a., the income need not be reflected in ITR? APPENDIX u Finance Act,