Key Higlights of Budget - Direct Taxes

Key Higlights of Budget - Direct Taxes
 
 
Increased turnover threshold for claiming 25 percent tax rate
 
The current lower tax rate of 25 percent is applicable only to companies whose annual turnover is up to Rs. 250 cr. This annual turnover threshold is proposed to be increased to Rs 400 cr.
 
Additional Tax on buy back of shares for listed companies
 
Listed companies shall also be liable to pay additional tax at 20 percent in case of buyback of share, as is the case currently for unlisted companies.
 
 
Additional Surcharge on income exceeding Rs 2 crore
 
The surcharge proposed to be levied on those having taxable income of more than Rs 2 crore but up to Rs 5 crore will be at the rate of 25% instead of 15% currently, a hike by 10 per cent. Leading to an impact of around 3% on tax paid.

Similarly, those having taxable income of more than Rs 5 crore, the surcharge proposed to be levied at 37 per cent, a hike of 22 per cent, from 15 per cent currently. Leading to an impact of around 7% on tax paid.
 
Deduction for interest paid on loans for purchasing electronic vehicles


Additional income tax deduction of Rs 1.5 lakh on the interest paid on loans taken to purchase electric vehicles over the loan period to tax payers who take loans to purchase electric vehicles.
 
Capital gains exemption for investments in start-ups
           
Extension of the period of exemption of capital gains arising from the sale of residential house for investment in start-ups up to 31 March 2021 and relaxation of certain conditions related to this exemption.
 
Tax Simplification and Ease of living
 
For making compliance easier by leveraging technology Interchangeability of PAN and Aadhaar card is introduced Those who don’t have PAN can file tax returns using Aadhaar & it can be used wherever PAN is required.
 
Pre-filling of Income-tax Returns
       For faster, more accurate tax returns Government is working to introduce Pre-filled tax returns with details of several incomes and deductions. Information to be collected from Banks, Stock exchanges, mutual funds etc.
Faceless e-assessment
 
Faceless e-assessment with no human interface to be launched. It will be carried out initially in cases requiring verification of certain specified transactions or discrepancies.
Affordable housing
 
Additional deduction up to Rs. 1.5 lakhs for interest paid on loans borrowed up to 31st March, 2020 for purchase of house valued up to Rs. 45 lakh.
Overall benefit of around Rs. 7 lakh over loan period of 15 years.
 
Other Direct Tax measures
 
For Simplification of tax laws & to reduce genuine hardships of taxpayers. Government has increased tax threshold for launching prosecution for non-filing of returns. Appropriate class of persons exempted from the anti-abuse provisions of Section 50CA and Section 56 of the Income Tax Act.
 
 
 
Amendments in TDS Provisions

Payments by individuals or HUFs (not liable for Tax audit) to resident contractor or professionals-Section 194M
 
TDS at the rate of 5% on the sum paid or credited in a year on account of contractual work or professional fees by an individual or a HUF (not liable for Tax Audit), if aggregate of such sums exceeds Rs. 50 lakhs in a year. In order to reduce the compliance burden, it is proposed that such individuals or HUFs can deposit the tax deducted using their PAN and shall not be required to obtain TAN.
(Applicable from 01.09.2019)
 
TDS on cash withdrawals exceeding Rs. 1 crore- Section 194N
           
Tax shall be deducted by a banking company or co-op. bank or post office at the rate of 2% from the amount withdrawn in cash from any account (saving or current account) if the amount of withdrawal exceeds Rs. 1 crore during the year.
(Applicable from 01.09.2019)
 
 
TDS from consideration for immovable property-Section 194-IA
 
Section 194-IA requires deduction tax 1 percent from consideration for acquisition of immovable property. It is now provided that consideration shall include other charges in the nature of club membership fee, car parking fee, electricity and water facility fee, maintenance fee, advance fee, or any other charges of similar nature that are incidental to the purchase of immovable property.
(Applicable from 01.09.2019)
 
 
 
TDS on taxable pay out of life insurance companies- Section 194-DA
 
Section 194 DA provides for deduction of tax at rate of 1% on any payment in respect of life insurance policy to a resident person
It is now provided that the tax shall be deducted at the rate of 5% computed on the income component (in contrast to 1% on the gross amount).
(Applicable from 01.09.2019)
 

 
Relief for Start-ups
 “Angel tax” issue resolved- start-ups and investors filing requisite declarations and providing information in their returns not to be subjected to any kind of scrutiny in respect of valuations of share premiums.
Funds raised by start-ups to not require scrutiny from Income Tax Department
E-verification mechanism for establishing identity of the investor and source of funds.
Special administrative arrangements for pending assessments and grievance redressal
No inquiry in such cases by the Assessing Officer without obtaining approval of the supervisory officer.
No scrutiny of valuation of shares issued to Category-II Alternative Investment Funds.
Relaxation of conditions for carry forward and set off of losses.