“This budget has both vision and action..”
Finance Minister Nirmala Sitharaman, on Feb 01, 2020 unveiled the budget for fiscal 2020-21, vowing to boost income of Indians and their purchasing power, in a bid to revive domestic economic growth that has slumped to lowest in decade.
This year’s Union Budget centres around three ideas – Aspirational India, Economic Development, a Caring Society.
Here are the key highlights of the budget on:
Taxation:
1. New taxation regime has been introduced for Individuals and HUF. The Individuals or HUF opting for this regime need to forgo prescribed exemptions and deductions. New Income Tax slab is as below:
Income Slabs (Rs) Tax Rates
Upto 2,50,000 NIL
2,50,000 to 5,00,000 5%
5,00,000 to 7,50,000 10%
7,50,000 to 10,00,000 15%
10,00,000 to 12,50,000 20%
12,50,000 to 15,00,000 25%
Above 15,00,000 30%
Plus, Health and Education Cess of 4% and surcharge as applicable.
Tax rebate under section 87A is ₹ 12,500 for persons having net taxable income upto ₹ 5,00,000.
2. Dividend Distribution Tax (‘DDT’) has been abolished and Dividend will be taxed in the hands of the receipts at the applicable rate.
3. Threshold limit for tax audit has been increased from Rs. 1 crore to Rs. 5 crore subject to certain conditions
4. Contribution by employer to employee’s account for PF, NPS and Superannuation more than Rs 7.5 lakh a year will be taxable
5. Concessional corporate tax rate of 15% is extended to companies in generation of electricity
6. Turnover limit for availing deduction under Section 80IAC has been increased from Rs 25 Crore to Rs. 100 Crore and duration from 7 years to 10 years
7. Option to co-operative societies for Tax at 22% plus surcharge without exemptions and exempts co-operative societies from Alternate Minimum Tax
8. New charity institution registration process be completely electronic
9. Introduces Direct Tax dispute resolution scheme ‘Vivaad se Vishwaas’ similar to IDT Sabka Vishwas in order to reduce litigation.
10. Proposes amendments in Income Tax Act to enable faceless Appeals after faceless Assessments
11. Proposes amendment to Income Tax Act for mandating CBDT to adopt taxpayers charter and CBDT to notify contents of the charter.
12. Necessary amendment to enable taking benefit of unabsorbed losses in amalgamation of PSBs
13. New Section 194O providing for a new levy of TDS at 1% on e-commerce operator for sale of goods or provision of service facilitated by it through its digital or electronic facility or platform.
14. TDS rate for TDS on fees for technical services (other than professional services) under Section 194J to be reduced to 2% from 10%
15. Amendment to Sec 206C to levy TCS on overseas remittance under liberal remittance scheme and for sale of overseas tour package
Startups & MSME:
1. Tax burden on employees due to tax on ESOPs to be deferred by five years or till they leave the company or when they sell, whichever is earliest.
2. New Simplified return for GST from April 2020
3. Start-ups with turnover up to Rs. 100 crore to enjoy 100% deduction for 3 consecutive assessment years out of 10 years.
4. App-based invoice financing loans product to be launched, to obviate problem of delayed payments and cash flow mismatches for MSMEs.
5. Amendments to be made to enable NBFCs to extend invoice financing to MSMEs
