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Key Tax Amendments for Residents Taxpayers by Union Budget 2020
Number of amendment is proposed for residents taxpayers in the Union Budget 2020. Important of them are as under:
New Tax Regime v/s Old Tax Regime
New optional Tax Rates u/s 115BAC is proposed for Individual, HUF as under:
||Rate of Tax
||Up to Rs 2,50,000
||From Rs 2,50,001 to Rs 5,00,000
||From Rs 5,00,001 to Rs 7,50,000
||From Rs 7,50,001 to Rs 10,00,000
||From Rs 10,00,001 to Rs 12,50,000
||From Rs 12,50,001 to Rs 15,00,000
||Above Rs 15,00,000
Taxpyer shall have option to either Pay tax at above rates and no deductions or exemptions to be claimed. Or Continue to Pay taxes at earlier rates after claiming deductions and exemptions as earlier.
It must be noted that option by Individuals and HUF having Business Income need to exercise option once and follow same option for all subsequent assessment years. Option can be withdrawn only once after exercising the option. Individuals and HUF not having any Business Income given flexibility to exercise option every year i.e., free entry and exit option is available for such taxpayers..
Assessments / Appeals and Tax Disputes-
Faceless Appeals t& faceless penalty proceeding is proposed to be conducted on lines of Faceless Assessments.
Tax Audit for Small and Medium Enterprises
It may be taken as a joke as the real beneficiary may not be there in the new amendment proposed. Tax Audit Threshold limit increased to Turnover of Rs. 5 Crores provided the aggregate cash receipts in a year does not exceed 5% of the Total Receipts and aggregate cash payments in a year does not exceed 5% of the Total Payments during the year. However, TDS continues to be deducted on Non-Salary payments if the Gross Receipts or Turnover of and Individual or HUF during the preceding financial year exceeds Rs. 1 Crore.
Affordable Housing Projects
- As per Section 80-IBA to incentivise building affordable housing and to boost the supply of such houses, the period of approval of the project by the competent authority is proposed to be extended to 31st March, 2021.
- As per Section 80EEA deduction allowed up to Rs.150,000/- subject to certain conditions shall be continued to incentivise first time buyers to invest in residential house property whose stamp duty does not exceed Rs.45,00,000/-. In order to continue promoting purchase of affordable housing, the period of sanctioning of loan by the financial institution is proposed to be extended to 31stMarch, 2021.
Extension of Definition of Work under Sec 194C
Work shall also include work carried out by contract manufacturer (job worker), to whom the raw material is provided by the assessee or its associate. Associate meaning same as mentioned in 40A(2)(b).
Relaxation in Variation in Stamp Duty Value and Consideration Value of Immovable Property
Difference in consideration received or accruing as a result of the transfer of land or building or both and the value adopted by Stamp Valuation authorities should not exceed 10% of the consideration amount as against earlier 5% rule.
- Sec 194O – TDS @ 1% to be deducted by Ecommerce Operators at the time of payment to supplier and or service provider. Such TDS would not be applicable where the supplier is an Individual or a HUF and the gross amount of sales or services do not exceed Rs. 5 lacs in a year. Once TDS is deducted under above section, no further TDS for the same service shall be deducted under any other section.
Start-ups : This is one of the area wherein amendment has been proposed almost in every budget in last few years. This year, tax Holiday for the Eligible Start-ups shall now be available for a period of 3 consecutive assessment years out of 10 years (earlier 7 years) beginning from the year in which it is incorporated and the Turnover cap increased to Rs. 100 Crores from earlier 25 Crores limit. Further,ESOPs to employees to be taxable after 48 months from end of relevant assessment year or on sale of such stocks or from the date of which the assessee ceases to be the employee of such start-up, whichever is earlier.
Further, VIVAAD SE VISHWAS SCHEME scheme is proposed whereby taxpayer would be required to pay only the amount of the disputed taxes and will get complete waiver of interest and penalty provided the assessee pays entire tax amount by 31st March, 2020. Those who avail this scheme after 31st March, 2020 will have to pay some additional amount. The scheme will remain open till 30th June, 2020.
New Regime for Co-operative Societies under section 115BAD that the Co-operative Society can choose Tax rate @ 22% with addition of surcharge @ 10% and cess @ 4% with no exemptions and AMT will be abolished for such Cooperative Societies.
New Unique Registration number to be applied by new and existing charitable institution Filing of statement of donation by Donee to cross-check claim of donation by donor by giving full information of the donor in order to claim Deduction by the donor which will be prefilled in IT return in New regime.
TDS and TCS
TDS on Fees for Technical Services u/s 194J reduced to 2% against earlier 10%. However, TDS on Professional Services continues to be at 10%. TCS @ 0.1% on sale of goods to be collected by specified sellers on consideration received from a buyer in a FY in excess of Rs. 50 lacs. Specified sellers means sellers having total sales, gross turnover or gross receipts exceeding Rs. 10 Crores during preceding financial year. No TCS to be collected if TCS is collected on such transaction under any other provisions or TDS is deducted by the buyer.
Penalty for Fake Invoicing
Penalty proposed to be introduced for issuing fake invoice or recording fake invoice without actual supply of goods or service. Penalty amount equivalent to amount of false entries or omitted entries.
Dividend Distribution Tax
For Resident Indians, TDS will be deducted u/s 194 by companies @ 10% if dividend distributed to shareholder exceeds Rs. 5,000/-. Sec 194K – TDS @ 10% on payments exceeding Rs. 5,000/- made by Mutual Funds to the investor.