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Union Budget 2020 : Direct tax highlights

Union Budget 2019: Direct tax Highlights 

The key takeaways of direct tax from the Union Budget 2020 of the Narendra Modi Government tabled by finance minister Nirmala Sitharaman in the parliament on February 1, 2020 are as given below:

Related to Corporate: - No changes in basic corporate tax rates for total turnover exceeding Rs. 400 Crore (as reported in FY 2018-19) if not opted for special rates 22% or 15% and extended tax rate @ 25%  in case of company having total turnover not exceeding Rs. 400 Crore (as reported in FY 2018-19). No change in rate of MAT

- In case eligible company opts for concessional rate of tax @ 15% or 22% then there will be no deduction available under Chapter VIA except 80JJAA / 80M

- Removal of dividend distribution tax on company on declaration of dividend w.e.f. 01.04.2020 and fully taxable in hands of shareholder and in case of shareholder is domestic company then deduction u/s 80M may be allowed for such dividend subject to certain conditions. TDS provisions also applicable on payment of dividend @ 10% in case of dividend exceeding Rs. 5000/-

- TDS rate reduced on Fee for technical services from 10% to 2% u/s 194J w.e.f. 01.04.2020

- TDS will be deducted at 1% by e-commerce operator on gross payments to the ecommerce participant. - TCS will be applicable in case of foreign remittance under LRS & overseas tour packages at the rate of 5%.

- Tax payer charter will be notified by CBDT

- Amended definition of Work for the purpose of section 194C for related party transactions

- Return of income due date for filing will be on or before 31st October instead of 30th September wherein tax audit is applicable. Due date for Tax audit report date remains to be 30th September.

- Faceless e-appeal / e-penalty proposed

- Vivad se vishwas scheme is proposed for old direct tax litigations pending at appellate levels by paying only the disputed tax amount and getting waiver of penalty and interest.

Related to Personal / firm taxation:

- New tax regime proposed wherein maximum exemptions / deductions are not allowed

- Modification in rules related to residential status of individual & HUF along with deeming residential status in case of Indian citizen subject to certain conditions

- Rationalization of tax treatment of employer contribution to RPF / Superannuation / NPS – Contribution exceeding Rs. 7.50 Lac will be taxable

The summary is based on the memorandum of union budget.

Please click here for the detailed summary on direct tax amendment in budget 2020.

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