Article discusses about Proposed Changes vide Fiannce Bill 2020-21 in Tax Rates, Concessional Tax Scheme, Changes in Provisions related to Residential Status, Changes in Tax Provisions related to Provident Fund, New TDS Provisions under Section 194O/194J and other Important Changes in TDS, Due date for filing of Form 3CEB, Important Filing Dates for the Year 2020-21, Important Changes in Custom Duty, Company law and GST etc.
1) Individual and HUF may OPT to pay as per below tax slabs
|Income Range (INR)||Existing (%)||Optional (%)|
|250,001 – 500,000||5||5|
|500,001 – 750,000||20||10|
|750,001 – 1,000,000||15|
|1,000,001 – 1,250,000||30||20|
|1,250,001 – 1,500,000||25|
|1,500,001 and above||30|
a) Exemption limit for individuals reaching 60 and 80 years remains unchanged at 300,000 and 500,000 respectively
b) Deductions, exemptions and carried forward losses restricted, with certain conditions
c) Surcharge remains unchanged at 10 per cent on income exceeding 5 to 10 million; stands at 15 per cent on income exceeding 10 to 20 million; stands at 25 per cent on income exceeding 20 to 50 million; stands at 37 per cent on income exceeding 50 million. However, surcharge on STT paid capital gains shall not exceed 15 per cent.
2) Tax rates on partnership firms, local authority and co- operative societies remain unchanged. However, concessional tax rate of 22 per cent is also available to resident cooperative society with certain conditions. Surcharge at 12 per cent where, income exceeds 10 million.
3) Corporate tax rate remains unchanged i.e.
|1 MSME / New enterprise||25|
a) Surcharge remains at 7 per cent and 12 per cent where income exceeds 10 million and 100 million respectively
b) The benefit of lower rate of tax is applicable to companies with turnover up to 4 billion during financial year 2018-19
c) Surcharge remains at 2 per cent and 5 per cent where income exceeds 10 million and 100 million respectively
4) Concessional Tax Scheme
|1 New enterprise||15|
a) Surcharge at 10 per cent and education cess at 4 per cent will be applicable
b) The benefit applicable to companies registered on or after October 1, 2019 and commencing manufacturing (including electricity generation) on or before March 31, 2023 with certain conditions
c) Deductions under chapter VIA restricted for availing concessional tax rate
5) RESIDENTIAL STATUS
The period to determine residential status of Individual/HUF is modified as under:
a) Time limit for computing the residential status of a Citizen of India/Person of Indian origin, who is on a visit to India reduced from 182 days to 120 days.
b) The period of 729 days or less during the 7 years immediately preceding the previous year to qualify as a ‘Resident but Not Ordinarily Resident’ removed. Further, the duration of being a Non-Resident in 9 out of 10 years, reduced to 7 out of 10 years.
c) An Individual, who is a citizen of India and not liable to tax in any other country, shall be deemed to be Resident in India.
Employer’s contribution in aggregate exceeding 750,000 to recognized provident fund, national pension scheme, approved superannuation fund taxable as perquisite in hands of employee. Annual accretion of income on such amount also taxable in hands of employee.
7) TAX WITHHOLDING
a) Companies, mutual funds, other specified funds and business trusts to withhold tax at specified rate on dividend.
b) As per the newly inserted section 194O, an e-commerce operator is liable to withhold tax at the rate of 1 per cent:
i) On the gross value of ‘goods’ or ‘services’ made through its digital platform, for an e-commerce participant.
ii) Tax shall be withheld at the time of credit or payment for sale/service.
iii) If the e-commerce participant is an Individual or HUF, tax shall not be withheld, if the payment does not exceed `500,000 and the PAN or Aadhaar number
c) Tax withholding on ‘fees for technical services’ to residents under section 194J, reduced from 10 to 2 per cent.
8) TRANSFER PRICING
a) Due date for filing of Form 3CEB advanced by a month to October 31.
b) Interest paid/payable to permanent establishment of a non- resident bank in India is not subject to any restriction.
a) Dividend income shall now be taxed in the hands of shareholder at the applicable rates. Only interest deduction is allowed up to 20 per cent on such income.
b) Seller of goods liable to TCS at the rate of 0.1 per cent on consideration received from the buyer exceeding 5 million, provided that the total sales, gross receipts or turnover of the seller in the preceding financial year, exceeds 100 million. In case PAN/Aadhaar of buyer not available, TCS rate would be 1 per cent.
c) Taxpayer to pay 20 per cent of demand or furnish security for obtaining stay before Income Tax Appellate Tribunal.
d) Threshold of tax audit for a person carrying on business raised from 10 to 50 million, where aggregate cash receipts/payments do not exceed 5 % of gross receipts/payments.
10) EASE OF COMPLIANCE
a) Proceedings before Commissioner of Income Tax (Appeals) and penalty proceedings, will now be conducted electronically.
b) No Return of income to be filed by Non-Resident earning income from royalty and fees from technical services which has been subjected to tax withholding.
c) Due date for filing of return of income of all companies and auditable persons, including partners of auditable firms is October 31.
11) CUSTOMS DUTY
a) Basic Customs Duty (‘BCD’) maintained at 10 per cent.
b) Health Cess introduced on import of specified medical devices at 5 per cent of their import value.
c) Electronic Duty Credit Ledger made available for credit of duty, tax or levy, chargeable on any material used in the manufacture of goods for export or any other financial benefit.
12) GOODS AND SERVICES TAX (GST)
a) Composition scheme to exclude inter-state supply of services, exempt services and supply of services through e-commerce operator.
b) Date of issuance of debit note delinked from date of underlying invoice to determine time period for availing input tax credit in respect of such debit note
c) Additional/Joint Commissioner can extend due date of application for revocation of cancellation up to 30 days. Commissioner empowered for further 30 days extension
d) Provisions introduced to prescribe manner of issuance of invoice in case of supply of specified taxable services
e) Requirement for issue of tax deduction certificate dispensed with.
f) Beneficiary also now equally liable for penalty for fraudulently availing input tax credit along with person committing such fraud
g) Availment of tax credit without an invoice or a bill shall be cognizable and non-bailable offence.
h) Time limit for issuance of Removal of Difficulties Order extended from 3 to 5 years.
13) COMPANY LAW
a) National Financial Reporting Authority (‘NFRA’) set up to monitor and enforce compliance with Accounting Standards and Auditing Standards.
b) Mandatory half yearly reporting introduced for companies having outstanding towards Micro Small Medium Enterprise (‘MSME’).
IMPORTANT FILING DATES FOR THE YEAR 2020-2021
|REGULATORY MATTER||DUE DATE
|Board Meeting||Four meetings every year with a gap not exceeding 120 days between two such meetings|
|Annual General Meeting (‘AGM’) (adoption of financials)||Within 6 months of end of the financial year|
|Annual Return with the ROC||Within 60 days from conclusion of AGM|
|Corporate Tax Return||October 31st|
|Tax Audit Report||October 31st|
|Transfer Pricing Report||November 30th|
|TDS Returns (Tax Withholding)||Quarterly|
|Individual Tax Return||July 31st|
|• GSTR 3B Monthly*|
|• GSTR 1 –|
|a) Turnover > `15 million) Monthly*|
|b) Turnover ≤ `15 million) Quarterly/Monthly*|
|Deposit of TDS||7th of every month|
|Deposit of GST||20th of every month|
* As notified till date