Direct Tax Changes & Highlights proposed in Budget 2020

February 01, 2020
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Income Tax Updates proposed in Budget 2020:

 

The additional new Tax regime is Optional in Nature.

1. Income Tax Slabs In Existing, as well as New Tax Regime, proposed in Budget 2020

 

S. No.

Income Slab

Existing Tax Rates

New tax Rates

1

Up to 2.5 Lakh

No tax

No Tax

2

From 2.5 lakh to 5 Lakh

5%

5%

3

From 5 lakh to 7.5 lakh

20%

10%

4

From 5 lakh to 10 lakh

20%

15%

5

From 10 lakh to 12.5 lakh

30%

20%

6

From 12.5 lakh to 15 lakh

30%

25%

7

15 lakh and above

30%

30%

 

Condition is that 70 tax exemptions are not available in New Tax Structure.

 

 

 

Note: Below Exemptions/Deductions not available in New Tax Regime:

(i) without any exemption or deduction under the provisions of clause (5) or clause (13A) or prescribed under clause (14) (other than those as may be prescribed for this purpose) or clause (17) or clause (32), of section 10 or section 10AA or section 16 or clause (b) of section 24 (in respect of the property referred to in sub-section (2) of section 23) or clause (iia) of sub-section (1) of section 32 or section 32AD or section 33AB or section 33ABA or sub-clause (ii) or sub-clause (iia) or sub-clause (iii), of sub-section (1) or sub-section (2AA), of section 35 or section 35AD or section 35CCC or clause (iia) of section 57 or under any of the provisions of Chapter VI-A other than the provisions of sub-section (2) of section 80CCD or section 80JJAA;

 

(ii) without set-off of any loss,—

(a) carried forward or depreciation from any earlier assessment year, if such loss or depreciation is attributable to any of the deductions referred to in clause (i);

(b) under the head “Income from house property” with any other head of

income;

(iii) by claiming the depreciation, if any, under any provision of section 32, except clause (iia) of sub-section (1) of the said section, determined in such manner as may be prescribed; and

(iv) without any exemption or deduction for allowances or perquisite, by whatever name called, provided under any other law for the time being in force.

(Follow us for the Simplified version of these Exemptions & Deductions)

 

  1. Corporate Tax Structure

 

Same Tax Rates of 22% as well as 15% for new Domestic Manufacturing entities.

 

  1. Foreign Investment Incentives

 

In order to incentivize the investment by the Sovereign Wealth Fund of foreign governments in the priority sectors, Now grant 100% tax exemption to their interest, dividend and capital gains income in respect of investment made in infrastructure and other notified sectors before 31st March 2024 and with a minimum lock-in period of 3 years.

 

  1. TDS Provisions

 

194LC

Existing Tax Regime

New Tax Regime Proposed

Interest payment to a non-resident for infrastructure bond Withholding rate of 5% under section applicable

up to 30th June 2020

extend the period up to 30th June 2023

 

 

 

194LD

 

 

in respect of bonds issued by Indian companies and government securities For a lower rate of withholding of 5% Foreign Investors (QFIs) applicable

up to 30th June 2020

Extend the period up to 30th June 2023

 

 

 

 

 

  1. IFSC Bonds

 

In order to incentivize listing of bonds at IFSC exchange, further reduce the withholding rate from 5% to 4% on interest payment on the bonds listed on its exchange.

 

  1. Start-ups

Existing Tax Regime

New Proposed Tax Regime

a. As per the Existing Tax regime, eligible Start-up having turnover up to 25 crores is allowed the deduction of 100% of its profits for three consecutive assessment years out of seven years if the total turnover does not exceed 25 crore rupees.

This limit is proposed to have a Turnover limit of 100 Crores from the existing 25 crores and the period is 10 years from the existing 7 years.

b. As per the Existing Tax Regime, ESOPs are taxable as perquisites at the time of exercise.

Under the New proposed Regime, Deferring the tax payment by five years or till they leave the company or when they sell their shares, whichever is earliest.

                                                    

 

  1. The concessional tax rate for Co-operatives

Existing Tax Regime

New Proposed Tax Regime

These cooperatives are currently taxed at a rate of 30%

a. to be taxed at 22% plus 10% surcharge and 4% cess with no exemption/deductions.

b. exempt these co-operative societies from Alternative Minimum Tax (AMT) are exempted from MAT

 

 

  1. Medium, Small and Micro Enterprises (MSME)

Existing Tax Regime

New Proposed Tax Regime

businesses having turnover of more than one crore rupees are required to get their books of accounts audited by an accountant

businesses having turnover of more than FIVE crore rupees are required to get their books of accounts audited by an accountant

 

There is a condition to it that limit shall apply only to those businesses which carry out less than 5% of their business transactions in cash.

 

 

  1. Affordable housing

Existing Tax Regime

New Proposed Tax Regime

Interest paid on loans was allowed on housing loans sanctioned on or before 31st March 2020.

Extend the date of loan sanction for availing this additional deduction by one more year.

A tax holiday is provided on the profits earned by developers of affordable housing project approved by 31st March 2020

to extend the date of approval of affordable housing projects for availing this tax holiday by one more year.

 

  1. Concession to real estate transactions

Existing Tax Regime

New Proposed Tax Regime

if the consideration value is less than the circle rate by more than 5 percent, the difference is counted as income both in the hands of the purchaser and seller

Increase the limit of 5% to 10%

 

 

  1. Charity Institutions

Existing Tax Regime

New Proposed Tax Regime

A taxpayer is required to fill the complete details of the donee in the income tax return for availing deduction.

pre-fill the donee’s information in the taxpayer’s return on the basis of information of donations furnished by the donee.

The process of registration was completely manual and scattered all over the country.

make the process of registration completely electronic under which a unique registration number (URN) shall be issued to all new and existing charity institutions

 

And Provisional registration for three years allowed

 

  1. Faceless Appeals

 

Existing Tax Regime

New Proposed Tax Regime

a new faceless assessment scheme has already been introduced. Currently, most of the functions of the Income Tax Department starting from the filing of the return, processing of returns, issuance of refunds and assessment are performed in the electronic mode without any human interface

Amend the Income Tax Act so as to enable Faceless appeal on the lines of Faceless assessment.

 

 

  1. No Dispute but Trust Scheme – ‘Vivad Se Vishwas’Scheme

Existing Tax Regime

New Proposed Tax Regime

No such facility available

 

A taxpayer would be required to pay only the amount of the disputed taxes and will get a complete waiver of interest and penalty provided he pays by 31st March 2020. Those who avail of this scheme after 31st March 2020 will have to pay some additional amount. The scheme will remain open till 30th June 2020.

Read more & stay tuned for more details on Unionbudget2020 , Incometaxslabs , Budget2020 , Nirmalasitharaman, Budget2020 , Dividentdistributiontax , BudgetSession2020

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