Direct Tax Proposals
Optional new tax regime to INDIVIDUALS
Income tax slab rates applicable under the NEW Tax regime and Old Tax regime to Individuals are as below:
Surcharge and Cess would apply as per existing rates.
Option to be exercised every year by an Individual or HUF having NO Business Income, in other cases once applied will be applicable from AY 2021‐22 onwards.
*Note: The exemptions and deductions that would need to be foregone includes inter alia exemptions and deductions claimed by individuals including House Rent Allowance (HRA), Leave Travel Concession, Standard Deductions and Professional Tax, Deductions under Chapter VI A (80C, 80D, 80E, 80G, etc. excluding deduction u/s 80CCD(2) and 80JJAA), Deduction in relation to Interest on Housing Loan on SOP, Additional Depreciation, Set off of b/f loss, Etc.
Concessional Rate of tax for Co‐operative Societies
Co‐operative societies are provided an Option to pay tax at Concessional rate of 22% instead of 30% subject to certain conditions i.e. deductions like additional depreciation, deduction u/s 35, Chapter VI A deduction excluding 80JJAA, b/f loss, etc shall not be allowed.
Abolishment of Dividend Distribution Tax (DDT)
Dividend Distribution Tax is abolished. Dividend from Shares and MF will be taxed in the hand of the receiver at applicable slab rates.
Extending Time Limit for availing deduction u/s 80‐IBA (Affordable Housing Projects)
Deduction of 100% of profits derived from business of developing and building housing projects, provided approved by the competent authority after 01.06.2016 but upto 31.03.2020. Now the deduction will be available if the approval is obtained from the competent authority before 31.03.2021
Section 50C / 56(2)(x) – Determination of full value of consideration for transfer of land and building.
Earlier if the value adopted or assessed by the Stamp Valuation Authority for land and building exceeded 105% of the actual consideration then the Value so assessed by the Stamp authority will be deemed to be the full value of consideration. This is now increased to 110%. Consequential amended is also made in section 56(2)(x) and increased to 110%.
Extension of exemption to Non Residents from filing the I.T. return
Currently, non‐residents receiving only Interest or dividend income from India on which tax is withheld were exempted from filing the Return in India. Now this exemption is extended to the income in the nature of Royalty and Fees for Technical Services. (w.e.f. AY 2020‐21)
Determination of residential status for certain categories of individuals
Registration of Charitable/Religious Trusts
New Process of Registration under new section 12AB for both existing and new charitable trust by making an application before Pr. Commissioner or Commissioner within below timelines:
Registration will be usually granted for 5 years and will have to be renewed before the expiry of such period.
Filing of statement of donation by donee to cross‐check claim of donation by donor
Deduction under section 80G/ 80GGA to a donor shall be allowed only if a statement is furnished by the donee who shall be required to furnish a statement in respect of donations received and in the event of failure to do so, fee and penalty shall be levied.
Certain contributions to be taxed as perquisite
Contributions exceeding INR 7,50,000 made by employer to an employee’s account in a recognized provident fund, notified pension scheme or approved superannuation fund would be taxable perquisite in the hands of the employees. The annual accretions to such contributions exceeding INR 7,50,000 would also be considered as taxable perquisite.
Cost of acquisition in case of land or building as on 01.04.2001 (Section 55)
Capital asset received by the assessee by way of inheritance, will, gift, etc and becomes the owner of the property before 01.04.2001 then the assessee has to adopt fair market value of asset as on 01.04.2001. However now it is amended that such fair market value shall not be greater than its stamp duty value on that date wherever available.
Enhanced timeline to take loan to buy home under affordable housing scheme
An additional deduction of INR 1,50,000 was made available in the Finance Act 2019 in relation to interest on loan taken for acquisition of house property for which the stamp duty value does not exceed INR 45,00,000. Such deduction was available subject to satisfaction of specified conditions including that the loan is required to be sanctioned between 1 April 2019 to 31 March 2020.The present budget proposes to extend the timeline for sanction of such loan to 31 March 2021.
Introduction of E‐Appeal
To launch an e‐appeal scheme in lines with e‐assessment scheme.
Increase in threshold and rationalization of provision relating to Tax Audit (Section 44AB)
To reduce the compliance burden, the threshold limit to conduct tax audit has been increased from Rs 1 Crore to Rs 5 Crore subject to following conditions:
‐ Aggregate of receipts in CASH during the year does not exceed 5% of all receipts.
AND
‐ Aggregate of payments in CASH during the year does not exceed 5% of all payments.
Threshold for Professionals in not changed and continues to be Rs 50 Lakhs.
Applicability of Tax Audit Provisions
Amendments related to TDS & TCS
Presenting below the key changes proposed in relation to TDS and TCS provisions under the Income Tax Act, 1961 (the Act). Unless otherwise mentioned, these amendments will be effective from April 1, 2020
A) TDS related Proposals
B) TCS related Proposals
Section 206C of the Act provides for TCS on business of trading in alcohol, liquor, forest produce, scrap etc. Sub‐section (1) of the said section, inter‐alia, provides that every person, being a seller shall, at the time of debiting of the amount payable by the buyer to the account of the buyer or at the time of receipt of such amount from the said buyer, whichever is earlier, collect from the buyer of certain goods a sum equal to specified percentage, of such amount as income‐tax.
In order to widen and deepen the tax net, it is proposed to amend section 206C to levy TCS as under
Changes in Due Date for Filing Audit Reports and Income Tax Return
Penalty for False Entry in Books – Section 271AAD
New Section 271AAD has been inserted which allows AO to levy a penalty of Sum Equal to the aggregate amount of False or Omitted Entry found during any proceeding under the act.
