The Finance Minister introduced several proposals in relation to
the personal tax regime in the Union Budget 2020 presented in the parliament on
February 1, 2020.
Direct Taxation (Income Tax)
· The government has
proposed a new income tax regime under Section 115BAC that comprises a
significant change in the tax slabs rates. Taxpayers have been provided with an
option whether they want to pay taxes according to the new regime or if they
want to continue paying taxes according to the existing regime. However, a few
taxpayers may not be able to switch back to the existing tax slab once they opt
to follow the new one.
New optional tax slabs: New income tax slabs will be available
for those who forgo exemptions and deduction
Taxable income slabs
|
Tax rates
|
Up to Rs 5 lakh
|
Nil
|
Rs 5 Lakh to Rs 7.5 Lakh
|
10%
|
Rs 7.5 Lakh to Rs 10 Lakh
|
15%
|
Rs 10 Lakh to Rs 12.5 Lakh
|
20%
|
Rs 12.5 Lakh to Rs 15 Lakh
|
25%
|
Rs 15 Lakh and above
|
30%
|
· Under section 194J- fees
for technical services, TDS has been reduced to 2% from 10%.
· Tax audit threshold has
been increased from Rs 1 crore to Rs 5 crore provided turnover/ gross receipts
in cash does not exceed 5% during the previous year. Also, payment made in the
P.Y in cash does not exceed 5%. For such taxpayers, the due date for tax audit
has been extended to the 31st of October from the 30th of September.
· Under Section 80EEA, the
additional deduction of Rs.1.5 lakh for interest paid on home loans will now be
allowed for the loans sanctioned till the 31st of March 2021.
· DDT has been
discontinued. Instead, the recipients of the dividend will have to pay tax at
their applicable rate.
· In the case of startups,
employees possessing Employee Stock Option Plans (ESOPs) may defer paying taxes
up to five years from the time of exercise, till the time they leave the
startup, or until they sell their shares, whichever is earlier.
· Eligible startups with a
turnover of up to Rs 25 crore is permitted to deduct 100% of its profits for
three continuous assessment years of seven years if the overall turnover is
under Rs 25 crore. This limit is now increased to Rs 100 crore. Furthermore, the
eligibility period to deduct is increased to 10 years from 7 years.
· Section 194: Dividend
paid by Indian companies, to a shareholder, who is resident in India, TDS @ 10%
if the dividend amount exceeds 5000 during the FY.
· Section 194K: Dividend
paid by MF to a resident TDS 10% will be deducted only if the dividend amount
exceeds 5000 during the FY
· Section 194: Dividend on
shares paid by company exceeding Rs 5000 will be subject to TDS @ 10%
· Section 194-O: Any
payment made by e-commerce operator to the participant, the operator will have
to deduct 1% TDS only if the annual amount paid or credited exceeds Rs 5 lakh.
· Section 206AA: in
relation to 194O has been amended to 5% instead of 20% in case of not
furnishing the PAN.
· Change in residential
status: (Section 6)
1.
An individual, being a
citizen of India, shall be deemed to be resident in India in any previous year,
if he is not liable to tax in any other country
2.
An individual being a
citizen of India, or a person of Indian origin who, being outside India, comes
on a visit to India in any previous year and is in India for 120 days or more,
shall be resident in India
3.
A person is said to be
“not ordinarily resident” in India in any previous year, if such person is
o an individual who has been a non-resident in
India in seven out of the ten previous years preceding that year;
or
o a Hindu undivided family whose manager has
been a non-resident in India in seven out of the ten previous years preceding
that year.
· Section 234G (insertion
of new section) relating to payment of fee of Rs 200 per day for default in
furnishing statement or certificate under section 35 by research association,
university, college, company or any other institution.
· Section 43CA, if value
adopted for the purpose of stamp duty does not exceed 110% of the actual
consideration received, then consideration so received shall be deemed to be
the full value of the consideration for computing profits and gains on transfer
of such asset other than capital assets. Before the amendment it was 105%
instead of 110%.
· Section 50C, in case of
transfer of capital asset being land or building or both, if value adopted for
the purpose of stamp duty does not exceed 110% of the actual consideration
received, then consideration so received shall be deemed to be the full value
of consideration for computing capital gains on transfer of such capital
assets. Before the amendment it was 105% instead of 110%.
Indirect Taxation (GST, Customs)
· The person
involved/benefited out of fake ITC shall also be liable for a penalty of 100%
of the tax involved.
· Composition scheme
restricted to taxpayers making the inter-state supply of service, supplies not
leviable to GST and supplies through e-commerce operator where TCS is
deductible.
· The date of the debit
note will be standalone considered for availing input tax credit, delinked from
the date of invoice.
· The retrospective effect
has been given for transition provisions from 01st July 2017, to nullify the
decision of Gujarat High Court in case of Siddhartha Enterprises.
· Powers provided to
notify the form of TDS certificate and late fee (200 per day, maximum of 5,000)
for non-issuance of TDS certificate has been waived off.
· A provision inserted for
cancellation of voluntary GST registration for distinct persons.
· Power to condone the
delay in applying for revocation of cancellation has been provided to the
additional commissioner and commissioner for a period of 30 days.
· Refund due to Inverted
tax prevalent for tobacco products is barred with a retrospective effect from
1st July 2017.
· Applicability of 6% CGST
rate (total of 12% IGST rate) for the supply of pulley, wheels and products
used in Agri machinery between 1st July 2017 to 31st December 2018.
· Ladakh has been included
in the definition of Union Territory. J&K will have its appellate tribunal.
· The law has been amended
to extend the imprisonment to the person ‘who causes to commit’ and ‘person
retaining the benefit’. Earlier the punishment is restricted to the person
committed. This punishment is restricted to the person fraudulently availing ITC
without an eligible invoice. Accordingly, these offences will be congnizable
and non-bailable.
· Supply of fishmeal
provided a retrospective GST exemption from 1st July 2017 to 30th September
2019.
· Provision to issue the
removal of difficulty order by CBIC extended from earlier three-year limit to
five years w.e.f 1st July 2017.
· Order for determining
expense in special audit will not require the Board’s approval.
· Provision to extend the
time limit to return the inputs and capital goods from job worker.
· Powers provided to
notify the time and manner of issuing an invoice for a specific category of
supplies or services.
· The entry in Schedule II
to the CGST Act on ‘Transfer of business assets’ will now exclude transactions
done without consideration from it.
MSMEs
Steps proposed by the government for the MSMEs:
· Amendments will be made
to Factor Regulation Act, 2011.
· Amendments to be made to
enable NBFCs to extend invoice financing to MSMEs.
· Provision of
subordinated debt for MSMEs by Banks which is guaranteed by Credit Guarantee
Trust. The debt will count as quasi-equity.
· App-based financing
loans will be introduced for MSMEsApp-based invoice financing loans product to
be launched, to obviate the problem of delayed payments and cash flow
mismatches for MSMEs.
Public sector banks (PSBs):
· Robust mechanism is in
place to monitor and ensure health of all scheduled commercial banks and
depositors’ money is absolutely safe.
Agriculture
· The government aims to
double farmers’ income by 2022
· Help 15 lakh farmers
solarise their grid-connected pump sets
· “KisanRail” and
“KrishiUdaan” for seamless transport of perishable farm goods
· Increasing coverage of
artificial insemination to 70%
· Raise fishery exports to
Rs 1 lakh crore by 2024-25
Education
· About 150 higher
educational institutions will start apprenticeship embedded courses
· Special bridge courses
to improve skill sets of those seeking employment abroad
· Ind-SAT to be conducted
in Africa and Asia under study in India programme
· Allocation of Rs 99,300
crore for the educational sector in 2020-21
· Allocation of Rs 3,000
crore for skill development
Financial sector
· Deposit Insurance
Coverage to increase from Rs 1 lakh to Rs 5 lakh per depositor
· Eligibility limit for
NBFCs for debt recovery under SARFAESI Act proposed to be reduced to asset size
of Rs 100 crore or loan size of Rs 50 lakh
· Separation of NPS Trust for
government employees from PFRDAI
· Proposal to sell balance
holding of government in IDBI Bank
Water, Wellness, and Sanitation Goals
· More than 20, 000
empanelled hospitals under PM Jan Arogya Yojana
· “TB Harega Desh Jeetega”
campaign launched to end TB by 2025
· Expansion of Jan
AushadhiKendra Scheme to all districts by 2024
· Focus on liquid and
greywater management along with waste management
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