The Finance Minister gave her much-awaited first budget speech and laid out the vision of the Government, which included, amongst others, building physical and social infrastructure, digital India reaching every sector of the economy and pollution free India. This vision is evident in the tax proposals as well. Let’s take a look at the key direct tax budget proposals that will impact individuals.
1. With an intent of revenue mobilisation, the Finance Minister stated that in view of rising income levels, those in the highest income brackets need to contribute more to the Nation’s development. To achieve this, it has been proposed to increase the rate of surcharge on income-tax to 25 per cent for individuals whose taxable income is between Rs 2 crores and Rs 5 crores, and to 37 per cent for individuals whose taxable income exceeds Rs 5 crores, from the existing rate of 15 per cent (applicable to all individuals whose taxable income is above Rs 1 crore). This would increase the maximum marginal rate of income tax to 39 per cent and 42.74 per cent, respectively for such tax payers.
2. In an attempt to deepen and widen the tax base, several proposals have been introduced.
i. For deduction of tax at source on immovable property, it is proposed to define the term ‘consideration for immovable property’ to include all charges of the nature of club membership fee, car parking fee, electricity and water facility fees, maintenance fee, advance fee or any other charges of a similar nature, which are incidental to transfer of the immovable property and taxes will have to be deducted on the gross amount as defined above.
ii. Gifts to non-residents:
Currently, gifts (money paid and/or property transferred) made by a person resident in India to a person residing outside India is being claimed as non-taxable in India, as the income does not accrue or arise in India. To ensure that such gifts made by residents are subject to tax in India, an amendment has been proposed to tax such gifts (made on or after July 5, 2019) in India, in the hands of the recipients, subject to certain exceptions/ treaty reliefs, if any.