Union Budget 2020-2021 - Highlights

Direct Tax Proposal:

1.      Citizen Charter to be included in Act to avoid tax payer’s harassment by officials.         CBDT to notify it.
2.      New Simplified Income Tax Regime (Optional for assesse) by reducing tax rates and removing deductions for Individuals:
a.      Basic exemption Limit 5 Lakh
b.      5 Lakh to 7.5 Lakh – Tax @10%
c.      From 7.5 Lakh to 10 Lakh – Tax @ 15%
d.      From 10 Lakh to 12.5 Lakh – Tax @ 20%
e.      From 12.5 Lakh to 15 Lakh – Tax @ 25%
f.       Above 15 Lakhs – Tax @30%

3.      Individuals having more deductions can continue in old regime of taxation with no change. 

4.      Review of all existing exemptions and deductions is made.

5.      Dividend Distribution Tax removed in hands of Company and now dividend is taxable in hands of individual as per applicable tax rates.

6.      Concessional Rate of TDS for foreign borrowing extended.

7.      Start ups – ESOP perquisite tax payment is differed in hands of employee to a date after 5 years/Leaving Company or selling shares whichever is earlier.

8.      Start up limit of turnover is increased from 25 Crores to 100 Crores.

9.      Cooperative Society Tax reduced to 22% without any deduction by bringing alternative minimum tax. This will be applicable with no deduction to be claimed. It is Optional.

10.   Tax Audit Limit now increased to Rs. 5 Cr – increased limit shall apply only to business which carried less than 5% business in cash.

11.   Housing Loan interest deduction of Rs. 1.5 Lakh for housing loan upto Rs. 45 Lakhs is extended for loans sanctioned in one more year.

12.   Tax Holiday for affordable housing projects has been extended by one more year. Date of approval is extended too.

13.   Section 43CA/Section 50C/Section 56(2)(x) difference between stamp duty value and market value is permitted upto 10%.

14.   Registration of charitable trust for tax exemption is completely made online. Unique number will be allotted to each trust.

15.   Face Less Appeal scheme on lines of Face Less assessment – now it will be online without human interface.

16.   Vivad se Vishwas dispute resolution scheme proposed in Direct Taxes on lines of Sabka Vishwas Scheme of Service Tax. Tax payer can pay the amount of disputed tax and get waiver of interest and penalty upto 31 March 2020. After 31 March 2020 till 30 June 2020, Taxpayer will have to pay some additional amount. Appeals pending at any level are covered.

17.   Instant allotment of PAN basis Aadhar without any additional form filing.

18.   Companies Act – Criminal liabilities to be substituted by Civil Labilities based on analysis.

Indirect Tax Proposals:

1. Customs Duty on Footwear and Furniture raised and Additional Health Cess levied on Medical Equipment Import.

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