supplement TO
Swamy’s
INCOME TAX ON SALARIES
2019-2020

Cat. N — (Fifty-first Edition)

(English Edition only)

Cat. No. SG-7

muthuswamy
brinda
sanjeev

SWAMY PUBLISHERS (P) LTD.

Chennai - 600 028 — New Delhi - 110 002.
 

This Supplement contains amendments based on the Finance

(No. 2) Act, 2019.

(1)

Page 5—
Salient features of the Finance Act, 2019, in Para. 3
Surcharge, substitute the following for the existing (b) and add (c) and (d)
below.—
“(b) Income exceeding ₹ 1 crore
but not exceeding ₹ 2 crores
(c) Income exceeding ₹ 2 crores — 25%
but not exceeding ₹ 5 crores
(d) Income exceeding ₹ 5 crores — 37%”

(2)

Page 13—
After Para. (l), add the following and renumber Paras. accordingly:-
“(m) To an individual not eligible to claim deduction under Section 80-EE,
interest payable on loan taken by him from any financial institution
for the purpose of acquisition of a residential house property up to
one lakh and fifty thousand rupees, subject to conditions.
[ Section 80-EEA

(n) Interest payable on loan taken by him from any financial institution
for the purpose of purchase of an electric vehicle up to one lakh
and fifty thousand rupees for loans taken during the period 1-4-2019
and 31-3-2023. [ Section 80-EEB”

(3)
Page 17—
In Para. IV, substitute the existing (b) with the following and add (c)
and (d) below (b).—
“(b) Add surcharge of 15% of income tax if income is more than ₹ 1 crore
but not exceeding ₹ 2 crores.
(c) Add surcharge of 25% of income tax if income is more than
₹ 2 crores but not exceeding ₹ 5 crores.
(d) Add surcharge of 37% of income tax if income is more than
₹ 5 crores.”
 

(4)

Page 19—
After Para. 11, add the following:—
“(11-a) Interest payable on loan taken from any financial institution for the
purpose of acquisition of a residential house property up to one lakh
and fifty thousand rupees, subject to conditions. [ Section 80-EEA
(11-b) Interest payable on loan taken from any financial institution for
the purpose of purchase of an electric vehicle up to one lakh and
fifty thousand rupees for loans taken during the period 1-4-2019 and
31-3-2023.  [ Section 80-EEB”

(5)

Page 20—
In Para. IV, add the following words at the end of the paragraph.—
“but not exceeding ₹ 2 crores and 25% if income is more than ₹ 2 crores
but not more than ₹ 5 crores and 37% if income is more than ₹ 5 crores”.

(6)
Page 37—
In Clause (12-A), for the words “forty per cent” the words “sixty per cent”
shall be substituted.

(7)
Page 53—
In Section 80-C, sub-section (2), after Clause (xxiv) the following shall
be inserted :—
“(xxv) being an employee of the Central Government, as a contribution to
a specified account of the pension scheme referred to in Section 80-CCD––
(a) for a fixed period of not less than three years; and
(b) which is in accordance with the scheme as may be notified by the
Central Government in the Official Gazette for the purposes of
this clause.
Explanation.— For the purposes of this clause, “specified account”
means an additional account referred to in sub-section (3) of Section 20 of the
Pension Fund Regulatory and Development Authority Act, 2013”.
 

(8)
Page 58—
In Section 80-CCD, sub-section (2), for the words “ does not exceed
ten per cent of his salary in the previous year” the words, brackets and letters
given below may be substituted.—
“does not exceed—
(a) fourteen per cent, where such contribution is made by the Central
Government;
(b) ten per cent, where such contribution is made by any other
employer,
of his salary in the previous year”.

(9)
Page 67—
After Section 80-EE, the following shall be inserted.—
“80-EEA. Deduction in respect of interest on loan taken for certain
house property.— (1) In computing the total income of an assessee, being an
individual not eligible to claim deduction under Section 80-EE, there shall be
deducted, in accordance with and subject to the provisions of this section, interest
payable on loan taken by him from any financial institution for the purpose of
acquisition of a residential house property.
(2) The deduction under sub-section (1) shall not exceed one lakh and
fifty thousand rupees and shall be allowed in computing the total income of the
individual for the assessment year beginning on the 1st day of April, 2020 and
subsequent assessment years.
(3) The deduction under sub-section (1) shall be subject to the following
conditions, namely:—
(i) the loan has been sanctioned by the financial institution during
the period beginning on the1st day of April, 2019 and ending on
the 31st day of March, 2020;
(ii) the stamp duty value of residential house property does not exceed
forty-five lakh rupees;
(iii) the assessee does not own any residential house property on the
date of sanction of loan.
(4) Where a deduction under this section is allowed for any interest referred
to in sub-section (1), deduction shall not be allowed in respect of such interest
under any other provision of this Act for the same or any other assessment
year.
 

(5) For the purposes of this section,––

(a) the expression “financial institution” shall have the meaning
assigned to it in Clause (a) of sub-section (5) of Section 80-EE;
(b) the expression “stamp duty value” means value adopted or assessed
or assessable by any authority of the Central Government or a
State Government for the purpose of payment of stamp duty in
respect of an immovable property.
80-EEB. Deduction in respect of purchase of electric vehicle .—
(1) In computing the total income of an assessee, being an individual, there shall
be deducted, in accordance with and subject to the provisions of this section,
interest payable on loan taken by him from any financial institution for the
purpose of purchase of an electric vehicle.
(2) The deduction under sub-section (1) shall not exceed one lakh and
fifty thousand rupees and shall be allowed in computing the total income of the
individual for the assessment year beginning on the 1st day of April, 2020 and
subsequent assessment years.
(3) The deduction under sub-section (1) shall be subject to the condition
that the loan has been sanctioned by the financial institution during the
period beginning on the 1st day of April, 2019 and ending on the 31st day of
March, 2023.
(4) Where a deduction under this section is allowed for any interest
referred to in sub-section (1), deduction shall not be allowed in respect of
such interest under any other provision of this Act for the same or any other
assessment year.
(5) For the purposes of this section,––
(a) “electric vehicle” means a vehicle which is powered exclusively
by an electric motor whose traction energy is supplied exclusively
by traction battery installed in the vehicle and has such electric
regenerative braking system, which during braking provides for the
conversion of vehicle kinetic energy into electrical energy;
(b) “financial institution” means a banking company to which the
Banking Regulation Act, 1949 applies, or any bank or banking
institution referred to in Section 51 of that Act and includes any
deposit taking non-banking financial company or a systemically
important non-deposit taking non-banking financial company as
defined in Clauses (e) and (g) of Explanation 4 to Section 43-B.”

(10)
Page 79—
In the proviso to Section 139, after the words “Section 10-BA”, the words
“or Section 54 or Section 54-D or Section 54-EC or Section 54-F or Section
54-G or Section 54-GA or Section 54-GB” shall be inserted.
 

(11)
Page 80—

In Section 139-AA, Aadhaar Number, in the proviso to sub-section (2)

the words starting from “deemed to be invalid” shall be substituted with the
words “made operative after the date so notified in such manner as may be
prescribed”.

(12)
Page 117—

Important Points, in Para. (b), add the following at the end of

the sentence:—

“but not exceeding ₹ 2 crores and 25% if income is more than

₹ 2 crore but not more than ₹ 5 crores and 37% if income is more than
₹ 5 crores”.

(13)
Page 146 / 147—
Chapter 12 — Solved Problem No. 15.— Substitute the following
for the existing calculation of deductions and NOTE 1 and 2 in the “Answer”:-
₹   
13,72,063
“Under Section 80-CCD (1-B) - Additional ... 50,000
Under Section 80-CCD (2)
Government’s contribution to New Pension Scheme ... 1,49,919
11,72,144
Under Section 80-D
CGHS Contribution ₹ 650 x 12 ... 7,800
11,64,344
Under Section 80-TTA ₹
Interest received ₹ 12,000
Admissible deduction ₹ 10,000 ... 2,000 2,000
(Balance treated as income)
   Net taxable income rounded off ... 11,66,340
 

Income Tax payable:—

First ₹ 2,50,000 ... Nil
₹ 2,50,001 to ₹ 5,00,000 @ 5% ... 12,500
₹ 5,00,001 to ₹ 10,00,000 @ 20% ... 1,00,000
Balance ₹ 1,66,340 @ 30% ... 49,902
1,62,402
Health and Education Cess @ 4% ₹ 6,496.08 6,496
         Total tax payable ... 1,68,898”

Note 1.— The contribution towards New Pension Scheme has been
worked at 10% of Pay plus DA for employees contribution and at 14% of
pay plus DA for Government contribution with effect from 1-4-2019.
The contribution has to be revised whenever there is change in these elements.
Hence, on 1-7-2019, on account of revision of DA the contribution has also
been revised. The contributions should be rounded off to the nearest rupee.

Note 2.— Government contribution to New Pension Scheme should be

included in the salary income and a maximum of fourteen per cent of his salary
is also allowed as deduction under Section 80-CCD (2). This deduction is
excluded from the limit of ₹ 1.50 lakh under Section 80-CCE (Total deductions
under Sections 80-CCC and 80-CCD).”