Budget 2020-Key Highlights

Finance Minister Nirmala Sitaraman presented the Union Budget-2020 in parliament today. Key highlights of the budget-2020 are:-
  • New slabs and reduced the tax rate for different slabs for an individual income up to Rs 15 lakh per annum, if a taxpayer opts for foregoing exemptions and deductions. The new tax regime will be optional and the taxpayers will be given the choice to either remain in the old regime with exemptions and deductions or opt for the new reduced tax rate without those exemptions.
  • New Proposed Income Tax Slab: @10% for Rs 5 Lakh to 7.5 lakh, @15% for 7.5 lakh to 10 lakh, @20% for 10 lakh to 12.5 lakh, @25% for 12.5 lakh to 15 lakh and @30% for above 15 Lakh. 
  • No tax up to Rs.5 Lakhs, therefore, the rebate continues.
  • Dividend distribution tax is proposed to vanish and the dividend will now be taxable in the hands of the receiver. Earlier companies were required to pay dividend distribution tax while paying dividend and dividend up to Rs10 lakhs was exempt in the hands of the shareholder. DDT abolishment would lead to additional funds in the hands of companies that can be further re-invested for expansion.
  • Citizens of India who are non-residents and are not paying tax in foreign countries will be deemed to be residents of India and their global incomes will be taxable in India. Accordingly, citizens of India who are residing in tax heavens will have to pay tax on their foreign incomes in India
  • Non-Resident Indians visiting India will be deemed as residents if their stay in India is 120 days or more. Their global incomes will become taxable.
  • The government will grant100% Tax Exemption for Foreign Sovereign wealth Fund Investments in India with a minimum lock-in of 3 years.
  • Hike in the corporate bond limit from 9 % to 15 %.
  • FM Nirmala Sitharaman says currently more than 100 exemptions provided in I-T Act. Now around 70 of them have been removed in the simplified regime.(Commerce Insiders will update the section-wise list soon.)
  • If you book an international tour package then you will have to pay 5 percent of package price as your TCS. The tour operator will collect 5 percent TCS from the buyer. There is no thresh hold. Further, if the buyer does not give his PAN to tour operator, then the tour operator will collect TCS of 10 percent. 
  • If you make any remittance under the Liberalised Foreign Remittance Scheme of Rs 7lakh or more in the financial year, then the banker will collect TCS of 5 percent of the Remittance amount. 
  • If you make a false entry in books or omit to make an entry in books, then penalty introduced of an amount equal to false entry or amount of entry omitted 
  • Tax on Cooperative societies proposed to be reduced to 22% plus 10 % surcharge and cess, as against 30%.
  • Tax Audit threshold limit is increased to Rs 5 crore from 1 crore if cash receipts or payments is up to 5% of gross receipts/sales/turnover. 
  • The corporate rate tax cut will be now available to power generation companies as well.
  • Section 50C and 45CA limit extended to 10% from 5%. 
  • Income Tax Act to be amended to facilitate e-appeal
  • Section 80G -Donations allowed as a deduction will be pre-filled in ITR forms now onwards. This will result in hassle-free claims for the individuals claiming tax exemptions.
  • For affordable housing, the deduction of Rs 1,50,000 will be extended to loan sanction by one year. Tax holiday on profits of developers involved in affordable housing projects will be extended by one year to March 2021.
  • ‘Vivad se Vishwas’ scheme for direct taxpayers whose appeals are pending at various forums. No penalty will be charged if taxpayers pay by March 31, 2020. Here, only the disputed tax amount has to be paid.
  • Customs duty increased on imported footwear and furniture. She also imposed health cess on import of medical equipment.
  • Customs duty on imported wall fans increased to 20 per cent from 7.5 percent
  • The same on tableware/kitchenware made of porcelain or China ceramic, clay iron, steel and copper has been doubled to 20 percent
  • Duty exemption withdrawn on raw sugar, agro-animal based products, tuna bait, skimmed milk, certain alcoholic beverages, soya fibre, and soya protein
  • Customs duty on catalytic converters, parts of commercial vehicles and other than electric vehicles have also been hiked.
  • Proposes to cut the import duty on newsprint to 5%.
  • Anti-dumping duty on purified terephthalic acid (PTA), which is used in the production of high-performance multipurpose plastics, has been abolished.
  • Excise duty raises by way of national calamity contingent duty on cigarettes, tobacco products.
  • E-commerce operators will now have to deduct TDS on all payments to e-commerce participants at 1% with those having PAN/Aadhaar and 5% for those without non-PAN/Aadhaar.
  • To augment infrastructure, an accelerated highways development programme will be taken up that includes 9,000 km of the economic corridor and 2,500 km of access-controlled highways. Besides, 2,000km each of coastal roads and strategic highways will be constructed.
  • It is proposed to impose a nominal health cess on import of medical equipment to boost the domestic medical devices sector and generate resources for health services
  • Insurance cover for a depositor will be raised from 1 lakh to 5 lakh per depositor. 
  • Deferment of tax payment by employees on employee stock ownership plan (ESOPs) from startups by five years.
  • 100 more airports to be developed by 2025 to support the UDAN scheme.
  •  Rs 1.7 lakh crore has been provided for transport infrastructure in 2020-21
  • 150 trains will run under the public-private partnership (PPP) mode
  •  Four stations will be redeveloped with the help of the private sector
  • More Tejas type trains to connect tourist destinations
  • Under consideration is a proposal for setting up large solar power capacity alongside railway tracks
  • Government is going to divest LIC by the issue of its IPO. LIC is the biggest institutional investor, it might be the biggest IPO in India.

[We will keep on updating this post as and when more information will be received and analysed by us.]

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[Disclaimer:-This article is being furnished for informational purposes only. We make every effort to use reliable & comprehensive information, but we do not represent that the contents of the article are accurate or complete.]

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