BUDGET 2020 HIGHLIGHTS
1. To remove Criminal liability from Companies Act, 2013, Govt. is proposed to make certain amendments in Companies Act, 2013. Similarly, other laws would also be examined, where similar provisions exist, and attempts would be made to correct them.
2. Depositor insurance limit proposed to increase from Rs.1 Lac to Rs.5 Lacs.
3. Eligibility Limit for NBFC for debt recovery under SARFAESI is proposed to reduce from assets size of Rs.500 crore to asset size of Rs.100 crore or loan size of Rs.1 crore to Rs.50 Lacs.
4. NBFCs to extend invoice financing to the MSMEs through TReDS, thereby enhancing their economic and financial sustainability. For this it is proposed to make necessary amendments to Factor Regulation Act 2011.
5. Govt proposes to sell a part of its holding in LIC by way of IPO.
6. Insertion of new section 115BAC, which enable assessee being Individual or HUF, to have option to avail new slab rates subject to forgo exemptions / deductions / losses.
Below Rs.5 Lacs Exempt
Rs.5 Lacs to Rs.7.50 Lacs 10%
Rs.7.50 Lacs to Rs.10 Lacs 15%
Rs.10 Lacs to Rs.12.50 Lacs 20%
Rs.12.50 Lacs to Rs.15 Lacs 25%
Above Rs.15 Lacs 30%
7. Concessional corporate tax rate of 15 per cent to new domestic companies in manufacturing and power sector.
8. Insertion of Taxpayer’s Charter in the Act by inserting new section 119A to the Act.
9. Instant PAN through Aadhar.
10. It is proposed to amend section 6 ‘Residential Status’ and following amendments are proposed: -
a) the exception provided in clause (b) of Explanation 1 of sub-section (1) to section 6 for visiting India in that year be decreased to 120 days from existing 182 days.
b) an individual or an HUF shall be said to be “not ordinarily resident” in India in a previous year, if the individual or the manager of the HUF has been a non-resident in India in seven out of ten previous years preceding that year. This new condition to replace the existing conditions in clauses (a) and (b) of sub-section (6) of section 6.
c) an Indian citizen who is not liable to tax in any other country or territory shall be deemed to be resident in India.
11. It is proposed to remove 70 existing exemptions available to assessee.
12. Tax concession for sovereign wealth fund of foreign governments and other foreign investments.
13. DIVIDEND DISTRIBUTION TAX: It is proposed to remove Dividend distribution tax and to adopt classic DDT. Now companies will not require to pay tax on dividend distribution, but shareholder / recipient is liable to pay tax on dividend income.
14. START-UPS:
a) TAX HOLIDAY: Tax benefits to Start-ups by way of deduction of 100% of their profits are enhanced by increasing turnover limit from Rs.25 crores to Rs.100 crores and period of eligibility is proposed to increase from 7 years to 10 years.
b) ESOP: Currently, ESOPs are taxable as perquisites at the time of exercise. This leads to cash-flow problem for the employees who do not sell the shares immediately and continue to hold the same for the long-term. To mitigate the hardship, it is proposed to ease the burden of taxation on the employees by deferring the tax payment by five years or till they leave the company or when they sell their shares, whichever is earliest.
15. CONCESSION TO CO-OPRATIVE SOCITIES: Concessional tax rate of 22% for co-operatives societies plus surcharge of 10% and education cess of 4%. It is also proposed to exempt these co-operative societies from Alternate Minimum Tax (AMT).
16. CONCESSION TO MSME: Turnover threshold of Rs.1 Crore u/s 44AB of Act is proposed to increase to Rs.5 Crores for the audit of MSMEs only in case of assessee who is having cash receipts not more than 5% of total receipts and cash payments not exceeding 5% of total payments made.
17. Due date of filing of return of income u/s 139(1) is proposed to be amended from 30th September to 31st October subject to filing of required audit reports by 30th September in case of persons carrying business or professions.
18. CONCESSION TO REAL ESTATE TRANSCATION: Currently, while taxing income from capital gains, business profits and other sources in respect of transactions in real estate, if the consideration value is less than circle rate by more than 5 percent, the difference is counted as income both in the hands of the purchaser and seller. It is proposed to increase the limit of 5% to 10%.
19. It is proposed to extend of time limits pertaining to the tax benefits for affordable housing by one year if the projects approved by 31.03.2020.
20. It is proposed to extent the time limit for availing benefit of deduction of housing loan interest by one year if the loan is availed on or before 31.03.2020.
21. It is proposed to amend the definition of ‘Work’ under section 194C to provide that in a contract manufacturing, the raw material provided by the assessee or its associate shall fall within the purview of ‘work’ under section 194C.
22. It is proposed to amend section 55 by insertion of proviso below explanation (b)(ii) of section 55(2)(ac), wherein it is proposed that the fair market value of land or building or both as on 01.04.2001 shall not be exceed the stamp duty value of such assets as on 01.04.2001, where such stamp duty value is available.
23. Filing of statement of donation by donee to cross check claim of donation by donors.
24. Issuance of Unique Registration Number to all charity institutions for easy tax compliance.
25. Health cess to be imposed on imports of medical equipment given these are made significantly in India.
26. ANNUAL FINANCIAL STATEMENT: It is proposed to delete section 203AA and insertion of section 285BB which propose to mandate the prescribed income tax authority or person authorized by them to upload a statement in the registered account of assessee.
27. LOSSES ON MERGER OF BANKS: Allowability of carry forward of Losses or depreciation in case of merger of banking companies or institution.
28. DISPUTE RESOLUTION SCHEME: Introduction of ‘VIVAD SE VISHWAS SCHEME’, wherein a taxpayer is required to pay only the amount of disputed taxes and will get complete waiver of interest and penalty provided the payment is made on or before 31.03.2020. After 31.03.2020, interest would be charged, and scheme is open till 30.06.2020.
29. FACELESS APPEALS: It is proposed to amend provisions so as to enable faceless appeals on the lines of faceless assessments.
30. PROVISION FOR E-PENALTY: It is proposed to empower central govt so as to enable e-penalty procedure under the e-assessment scheme.
31. CLARITY ON STAY BY ITAT: It is proposed to provide that ITAT may grant stay under the first proviso subject to the condition that the assessee deposits not less than twenty per cent of the amount of tax, interest, fee, penalty, or any other sum payable under the provisions of this Act, or furnish security of equal amount in respect thereof. It is also proposed to substitute second proviso to provide that no extension of stay shall be granted by ITAT, where such appeal is not so disposed of which the said period of stay as specified in the order of stay. However, on an application made by the assessee, a further stay can be granted, if the delay in not disposing of the appeal is not attributable to the assessee and the assessee has deposited not less than twenty per cent of the amount of tax, interest, fee, penalty, or any other sum payable under the provisions of this Act, or furnish security of equal amount in respect thereof. The total stay granted by ITAT cannot exceed 365 days.
32. Simplified GST returns shall be implemented from 1st April 2020.
33. Refund process under GST to be fully automated.
34. New provisions inserted for levying penalty on fake invoicing under GST.
KUNDAN WAHI
FCA, LL.b.
