Income tax highlights of Budget 2020

Income tax highlights of Budget 2020
Total Income Existing Proposed (Option)
Individual, HUF, AOP, BOI (Conditions in next slides)
0 – 2,50,000 Nil Nil
2,50,001 – 5,00,000 5% 5%
5,00,001 – 7,50,000  

20%

10%
7,50,001 – 10,00,000 15%
10,00,001 – 12,50,000  

30%

20%
12,50,001 – 15,00,000 25%
More than 15,00,000 30%

 

There is no change in Surcharge and Cess.

  • The scope of Sec. 115BAB (15%) is expanded to include the companies engaged in the business of generation ofelectricity
  • There is no change in Tax rate of Company, Firm,LLP

Conditions…1: List of Exemptions/Deductions not allowed

  • Leave TravelAllowance
  • House RentAllowance
  • Standard Deduction of Rs.50,000 available to salaried taxpayers
  • Entertainment Allowance and Professional Tax u/s16
  • Deduction of 15,000 from FamilyPension

 

  • Set off of House Property Loss against any other head of income
  • All Chp-VI A Deductions except deduction u/s 80CCD(2) and u/s80JJAA
  • No set off of Brought Forward Loss or UnabsorbedDepreciation
  • No deduction for Additional Depreciation
  • No deduction or exemption u/s10/10AA/24(b)/32AD/33AB/33ABA/35AD/35CCC
  • No deduction or exemption for allowances orperquisites

Conditions… 2

  • Individual or the HUF with businessIncome
    • Option once exercised for a previous year shall be valid for that previous year and all subsequentyears.
    • The option can be withdrawn only once for a previous year other than the year in which it was exercised and thereafter, the individual or HUF shall never be eligible to exercise option under thissection

 

  • Individual or the HUF without businessIncome
    • Option to be exercised for every previousyear 

Depreciation shall be allowed for any subsequent year so however, that where there is a depreciation allowance in respect of a block of asset which has not been given full effect to prior to the assessment year beginning on 1st April, 2021, corresponding adjustment shall bemade.

Sec-139 Due dates of Return of Income:

 

Type

Due Dates
Existing Proposed
Income Tax Return (w/o Audit) 31stJuly No Change
Income Tax Return (with Audit) 30thSeptember 31stOctober
Audit Report 30thSeptember 30thSeptember
Income Tax Return (Working Partner) 30thSeptember 31stOctober
Income Tax Return (Non-working Partner) 31stJuly 31stOctober

 

Deposit Insurance Coverage

Particulars Old Regime New Regime
Deposit Insurance and Credit Guarantee Corporation

(DICGC)

Rs. 1,00,000 5,00,000

 

Applicability of Tax Audit Provisions

 

Turnover or Gross Receipts

 

 

Profit and gains

 

Existing Tax Audit Applicable?

Proposed Tax Audit Applicable?
Cash Receipts / Payments*
Upto 5% of total > 5% of total
 

Upto 1 crores

< 8% (or 6%) Yes (44AD) Yes (44AD) Yes (44AD)
8% (or 6%) or more No No No
 

1 – 2 crores

< 8% (or 6%) Yes (44AD) Yes (44AB) Yes (44AB)
8% (or 6%)or more No No No
 

2 – 5 crores

Upto 8%(or 6%) Yes (44AB) No Yes (44AB)
>8% (or 6%) Yes (44AB) No Yes (44AB)

Receipts / Payments = Sales, turnover or gross receipts / Expenditure

Residential Status:

  • Residence OfIndia
Particulars Existing Proposed
Indian Citizen living in india 182 days or more in a year OR 60 days or more in a year AND 365+ days in 4 years No Change
Foreign or Indian Citizen comes on visit to India (NRI / PIO) 182 Days or more in a year 120 Days or more in a year
  • Not OrdinaryResidence
Particulars Existing Proposed
Individual / HUF Non Resident in India in nine out of ten preceding previous yearsor

Seven preceding previous years been in India for 729 Days or less

Non Resident in India in seven out of ten preceding previous years

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 or territory by reason of his domicile or residence or any other criteria of similar nature.

Dividend Distribution Tax (DDT) Removed

  • DDT not applicable to domesticcompanies
  • Dividend income Taxable in the hands of shareholders / unitholders at the applicable taxrate 

Vivad se Vishwas Scheme: 

  • Under this scheme, a taxpayer would be required to pay only the amount of the disputed taxesand will get complete waiver of interest and penalty provided he pays by 31stMarch,2020.

Those who avail this scheme after 31stMarch, 2020 will have to pay some additional amount. The scheme will remain open till 30thJune,2020. 

Provision for E-Appeal:

  • It is proposed to empower Central Government to notify an e-appeal scheme for disposal of appeal by an appellate system with dynamic jurisdiction by one or more Commissioner(Appeals)

 

Extending Time Limit For Affordable Housing Project Under Section 80-IBA

 

Particulars Existing Proposed
Deduction of an amount equal to 100% of the profits and gains derived from Building and developing Affordable Housing. Project approved by the competent authority up to31st March,2020. Project approved by the competent authorityupto 31st March,2021

 

Interest on loan for affordable housing (Section 80EEA): 

Particulars Existing Proposed
Deduction Upto Rs. 1,50,000 in respect of Payment of Interest on Loan taken for Affordable Housing Loan sanctioned upto 31st March, 2020. Loan sanctioned upto 31st March, 2021

 

Start Ups: Section 80-IAC Tax Incentive:

Particulars Existing Proposed
Period For Claiming Deduction of 100% on Net Profit for 3 Consecutive Assessment Years Within 7 Years from the Incorporation Within 10 Years from the Incorporation
Turnover Limit for Availment of Deduction Upto 25 Crore Upto 100 Crore

Cost of Acquisition (asset acquired before 01.04.2001):

Existing Proposed
Fair Market Value as on 1-4-2001 or Actual cost at the option of the assessee. Fair Market Value as on 1-4-2001 or Actual cost at the option of assesseesubject to Fair Market value shall not exceeds Stamp Value as on 1-4- 2001.

 

Employee Stock Option Plan (ESOP) taxability for Employees:

Particular Existing Proposed
ESOPs taxed as perquisites under section 17(2). Tax on perquisite is required to be paid at the time of exercising of option. tax on such income should be paid within fourteen days —

(i)             after the expiry of forty eight months from the end of the relevant assessment year;or

(ii)           from the date of the sale of such specified security or sweat equity share by the assesse;or

(iii)                  from    the    date     of         which   the    assesse         ceases to      be        the employee of theperson;

Whichever is the Earliest

 

Penalty:

Section Particulars Penalty
271AAD Books of accounts found to have

–                          False entry

–                          Omission of an entry to evade taxliability

Equal to the aggregate amount of such false or omitted entry
271K Failure to furnish Statements (with reference to sec. 35, 80G) Rs.10,000 to 1,00,000

 

TDS:

Secton Particular Existing Proposed
 

 

194C

Payment to the contractors Expression ‘work’ defined ‘work’ expanded to include

supply according to requirements of the manufacturer, even if raw material is supplied by associate enterprise of such customer

 

 

194J

Any person other than Individual/HUF Professional Service, Remuneration, Fees, Commission, Royalties, Technical Services : TDS Rate 10% Professional Service, Remuneration, Fees, Commission, Royalties :TDS Rate 10%

Technical Services : TDS Rate 2%

 

194O

Sale done by the Participants through e-commerce platform 1% on gross amount

 

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