Union
Budget 2020
In order to provide significant relief
to the individual taxpayers and to simplify the Income-tax law, I propose to
bring a new and simplified personal income tax regime wherein income tax rates
will be significantly reduced for the individual taxpayers who forgo certain
deductions and exemptions," Finance Minister Nirmala Sitharaman said in
her Budget 2020 speech as she proposed new income tax rates and slabs for those
forgoing exemptions and deductions.
The new tax rates will be optional.
Instead of actually simplifying, tax experts say that the dual tax rates might
create confusion for individuals since they will have to calculate tax under
both the regimes to see which is more beneficial.
Further, an individual
will have an option to switch between the two rates on a year to year basis.
But those with business income can only chose to switch once. These new income
tax related proposals will come into effect from financial year 2020-21.
Direct Tax Amendments
|
Income (Rs)
|
Old Tax Rate (option 1)
|
New Tax Rate (option 2)
|
|
2,50,000
|
NIL
|
NIl
|
|
2.50.000 – 5.00.000
|
5 %
|
5 %
|
|
5,00,000 – 7.50.000
|
20 %
|
10 %
|
|
7,50,000 – 10,00,000
|
20 %
|
15 %
|
|
10,00,000 – 12,50,000
|
30 %
|
20
%
|
|
12,50,000 – 15,00,000
|
30 %
|
25
%
|
|
Above 15,00,000
|
30 %
|
30 %
|
New Slab rate is
available for salary class and without having any deduction like insurance,
PPF, child education, home loan interest etc.
|
Income (Rs)
|
Old Tax Liabilities (option 1)
Assumption Rs 2,00,000 as Deduction 80 c and 80D and others. And Rs 50000 as
standard deduction
|
New Tax Liabilities (option 2)
No Deduction is allowed
|
|
2,50,000
|
NIL
|
Nil
|
|
5.00.000
|
NIL
|
12.500
|
|
7.50.000
|
12,500
|
37,500
|
|
10,00,000
|
62,500
|
75,000
|
|
12,50,000
|
1,12,500
|
1,25,000
|
|
15,00,000
|
1,87,500
|
1,87,500
|
|
20,00,000
|
3,37,500
|
3,25,000
|
Above calculation on
assumption for investment, and Without levied
surcharge and education tax.
Other Amendments
Ø
NRI will
have to pay tax (Indian person who are outside India
has to file ITR in India and disclose all income)
Ø
DDT is
abolished but not in actual term: Dividend Distribution Tax is abolished and
government is loss of Rs 25,000 corore loss as bale in hand of corporate but
taxable in hand individuals. (In our opinion minimum 20% or higher slab person
investing into shares and got divided. As governments is claiming loss of DDT
of Rs 25,000 crore as loose 18% DDT but governments will received tax at least
20% or higher rate so there is no loss of revenue. As per our opinion collect
regarding Dividend will be higher from present scenario).
Ø
Unproductive
land will be used for solar plant so it’s good news for land owner and power
sector
Ø
Solar
company is also charged with 15% if it is setup new company after 1st
oct 2019.
Ø
who
invest in share and earn dividend
Ø
Vivad se
viswas scheme is for Income Tax and pay only principle amount if payments are
made on or before 31st March 2020.
Ø
Tax Audit
Limit: Income tax audit limit increased to Rs. 5 Crores for those businesses
who have less than 5% cash business.
Ø
Income from
Foreign Sovereign Wealth Fund in India has been exempted for investments made
till 2024 for a period of 3 years.
Ø
Taxation
of ESOPs deferred to 5 years from date of exercising of option, sale of shares
or leaving the company, whichever is earlier.
Ø
Startup
Tax Incentive: Tax holiday available to startups extended to startups having
turnover upto Rs. 100 Crores from the current limit of Rs. 25 Crores. Tax
holiday extended to 10 years from 7 years
Ø
Tax on cooperative Society: Tax rate of cooperative societies
reduced to 22% plus 10% surcharge
Ø
Additional
housing loan interest: Additional Interest deduction of 1.5 lakhs available to
buyers of affordable houses now available for loans sanctioned up to March 31,
2021 (from earlier date of March 31, 2020)
Ø
Tax
Holiday for Builders: Tax holiday of developers of affordable housing extended
by another one year up to March 31, 2021.
Ø
Capital
gain: Difference in value allowed up to 10% of stamp duty value for sale or
purchase of immovable property.
Ø
For the
purpose of determining residential status, the number of days for stay in India
will be 120 days as against 182 days.
Ø
Residential
Status: For Resident but not ordinary resident now test will be of nonresident
in 7 out of 10 preceding years as against present condition of 9 out of 10
preceding years.
Ø
TCS Rate:
TCS at the rate of 0.1% will be applicable on sale of goods if total sales to
one person is more than Rs 50 lakhs by a person having turnover of more than Rs
10 crore.
Ø
TCS in foreign
remittance under LRS exceeding Rs 7.00 lakh at the rate of 5%. Also on oversea
tour package &5%.
Ø
TDS on
ecommerce: TDS on e-commerce payment to e commerce participant at the rate of
1%
Ø
TDS on
FTS reduced under section 194J to 2%
Ø
12A and
80G for NGO: Charitable Trust Registration and 80 G exemption to be for 5 years.
All existing trust to apply again (Its painful for
trust and trustee for re apply and question mark on transparency )
Ø
80G: 80 G
exemption holders to submit annual statement of donation received. Failure to
submit such statement fee of Rs 200 per day for each day of default under
section271G and penalty of Rs 10000 to Rs 1.00 laky under new section 271J.
Ø
Penalty
for false entry of invoice or omitted invoice @100% of such transactions under
new section 271AAD
Ø
LIC and
IDBI disinvestments
Ø
Sensex
open at 40,753 and closed at 39,735
Impact on goods due to budget
|
Costlier
|
Cheaper
|
|
Cigarettes, Tobacco
|
News Print
|
|
Imported Refined Veg oil,
Ghee,
|
Light weight coated paper
|
|
Imported PCBA for Mobile
|
Sport Goods
|
|
Footwear
|
Finger print reader
|
|
Furniture
|
Domestic Mobile manufactured
|
|
Fans
|
|
|
Table Ware/ Kitchen wear or
china ceramic
|
|
|
Imported Household items
|
|
|
|
|
Amount tracking for budget
(Assumption Rs 1)
|
Paisa
|
Receiving
|
|
Paisa
|
Allocation
|
|
20 p
|
Loan (Borrowing)
|
|
6 p
|
Pension
|
|
18 p
|
Corporation Tax
|
|
6 p
|
Subsidies
|
|
18 p
|
GST
|
|
8 p
|
Defence
|
|
17 p
|
Income Tax
|
|
22 p
|
Center scheme
|
|
10 p
|
Non Tax Revenue
|
|
10 p
|
Other Expenditure
|
|
7 p
|
Excise duty
|
|
10 p
|
Finance commission
|
|
6 p
|
Non debt capital receipts
|
|
18 p
|
Interest
|
|
4 p
|
Custom
|
|
20 p
|
State Share for tax and
revenue
|
|
100 p
|
|
|
100 p
|
|
All information is
base on budget and other reliable source.
Manish
Kumar Sinha
