Budget 2020

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 1^st 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 31^st 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