Budget for FY 2020-21 has been announced by Finance Minister Shri. Niramala SItaraman on Feb 1, 2020. FM called this budget as pro-middle class and pro-poor budget. Many proposal have been made particularly towards automation of economy and infrastructure and agriculture sector. Government is also taking steps to align the existing Income Tax laws with the drafted Direct tax code. But there is very little probability of improvement in the present economic conditions with the proposed changes. Let us take a quick look at the highlights of “The Budget 2020“.
- New Tax regime for Individual/HUF taxpayers (Optional).
- Change in slab rate
- Will have to forego few of the most common deductions and set-offs
- HRA, Leave travel concession, Set-off of house property (up to 200000 available earlier), Deduction of 80C, Standard deduction u/s 16(ia) and so on.
| TI | Old tax regime | New Tax regime |
| 0-2,50000 | Nil | Nil |
| 2,50,001-5,00,000 | 5% | 5% |
| 5,00,001-7,50,000 | 20% | 10% |
| 7,50,001-10,00,000 | 20% | 15% |
| 10,00,001-12,50,000 | 30% | 20% |
| 12,50,001-15,00,000 | 30% | 25% |
| Above 15,00,000 | 30% | 30% |
- Abolishment of distribution tax (Earlier collected by domestic co. and AMC for Mutual fund units). Income will be taxed as normal income taxable as per applicable slab rate under income under the head other sources. (Estimated DDT revenue forgone amounts to 25000 crores.
- Under new Tax regime, co-operative societies to pay taxes at 22% + 10% surcharge + 4% cess. Provision for Alternative minimum Tax will not be applicable. Further, if new Tax regime adopted, specific exemptions, deductions and incentives will not be allowed which is allowed earlier as per Act.
- Burden of tax payment of in case of ESOP in case of issue to startup co. will be eased by deferring tax liability in
- Five years
- Till employee leave co.
- When they sell shares
(whichever is earlier)
- Threshold limit of audit u/s 44AB has been increased from 1 cr. to 5 cr. (where cash payment and receipt doesn’t exceed 5% of the total payments and receipts).
- Scope of e-assessment is extended to best judgement assessment.
- Concession to real estate transactions increased from 5% to 10 %. Now if full value of consideration is less than circle rate (Municipal value) 10% such amount shall be taxable in the hand of both buyer and seller as per relevant provisions.
- NRI visiting India and their stay is more than 120 days, they will be deemed to be resident for the purposes of taxability and they will be liable to pay taxes on their global income provided the terms of DTAA are not in contrary.
- Taxpayers character mandated.
(The details of content of the charter shall be notified soon by CBDT)
- Vivad se Vishwas scheme: – A taxpayer would be required to pay only the amount of disputed taxes and will get complete waiver of interest and penalty, if he pays by 31 March 2020. (Scheme will continue till 30 June 2020, with some extra charges over delay in payment of disputed tax).
Tax payers whose appeal is pending at any level can get benefit of this scheme.
- Mention of New Education Policy
- Government e-marketplace (GeM) for creating a unified procurement system in country for providing single platform procurement of goods, services and works. With a proposed turnover of 3 lakh crores.
- Proposal to sell a part of governments holding in LIC by way of Initial Public Offering (IPO)
(The estimated amount to be raised from IPO is 70000 crores.)
- Extension of concessional corporate tax rate of 15% for new domestic co. engaged in the generation of electricity.
- Pilot project for SMS based GST return filling for nil return, return pre-filling, improved input tax credit flow and overall simplification.
For details please contact:
Himanshu Kumar
kumarhimanshu36353@gmail.com
Credits: Taxmann Pvt. Ltd.
The whole blog also includes information from articles from few of the prestigious newspapers, and we are not responsible for the credibility of such information.
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