Finance Minister Mrs. Nirmala Sitharaman presented the Union Budget for the fiscal year 2020-21 on 1st February 2020. 


Below given are the major highlights of direct tax provisions.


1. Dividend Distribution Tax (DDT) has been abolished and companies will not be required to pay any DDT. However, the dividend amount shall be taxable in the hands of recipients as per their slab rates. This has been done to save them from the tax burden.

2. A concessional corporate tax of 15% has been extended to Power Generation Companies.

3. Tax Audit turnover threshold u/s 44AB has been increased from Rs.1 crore to Rs. 5 crores, provided the taxpayer has not done more than 5% of business transactions in cash. This has been done to give incentives to small taxpayers.

4. New tax rates for individuals – Optional and available for those who forgo exemptions/deductions available currently under different sections.

Income Slab
Existing Rate
New Tax Rate
0-2,50,000
0%
0%
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%
> 15,00,000
30%
30%

** (Rebate available)

5. The turnover threshold for Start-up exemption has been increased from Rs. 25 crores to Rs. 100 crores and a period of 7 years relating to tax relief have been extended to 10 years.

6. Concessional tax rate @22% has been provided to Co-operative Societies without availing any exemptions and now they will not be required to pay any AMT.

7. Presently tax on ESOP received by employees of Start-up applicable at the time of exercise of the option. Now, it is deferred (i.e. 5 years or leaving the company or sale whichever is earlier).

8. Currently, under different sections (i.e. 50D, 43CA, 56) for real estate transactions, stamp duty value is considered for tax purposes if the difference between actual consideration and the stamp duty value more than by 5%. But now the same has been increased to 10%.

9. In order to put an end to tax harassment of any citizen, Taxpayer Charter has been proposed to insert as a part of Statues.

10. 100% tax concession has been allowed on interest, dividend or capital gains from Sovereign Wealth Funds on investment in infrastructure funds.

11. Concessional withholding tax rate @5% u/s 194LC (i.e. interest payment to non-residents) has been extended up to 30-June-2023.

12. Concessional withholding tax rate @5% u/s 194LD (i.e. interest on certain bonds) has been extended up to 30-June-2023 and also extended to municipal bonds with tax rate @4%.

13. Similar to Sabka Vishwas Scheme under GST, "Vivad se Vishwaas Scheme" introduced in the Income Tax Act. Under this scheme, appeals pending before different forums will be withdrawn if the taxpayer pays disputed tax amount on or before 31-Mar-2020 and in that scenario no interest or penalty will be charged.
Further, this scheme shall be made available till 30-June-2020 provided the taxpayer has to pay an additional amount over and above disputed tax.
14. There is a proposal to amend the Income Tax Act to allow faceless appeals against tax orders similar to faceless assessment.

15. The time limit to avail additional Rs.1.50 lakhs deduction towards interest on affordable housing loans has been extended up to 31-Mar-2021.

16. It has been proposed to introduce a new process for the instant allotment of PAN on the basis of Aadhaar.

17. There is a proposal to simplify the ITR forms which will pre-fill the details of the donee to avail deduction u/s 80G.

18. The government has proposed that there shall be no manual submission of application by Charitable Institutions for registration/approval under the Income Tax Act and provisional registration number shall be issued with validity up to 3 years.

19. The tax holiday period for developers of affordable housing schemes has been extended by another 1 year.

Download Budget Speech of Finance Minister

Download Budget Speech of Finance Minister:


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