Finance Bill 2020 -Analysis of 19 Important Changes in Income Tax

HIGHLIGHTS OF FINANCE BILL, 2020

APPLICABLE TO ASSESSMENT YEAR 2021-22 (FINANCIAL YEAR 2020-21)

(HOWEVER SOME AMENDMENTS ARE PROPOSED TO BE EFFECTIVE FROM 1.4.2020/ DIFFERENT DATES NOTIFIED AND SOME ARE APPLICABLE TO ASSESSMENT YEAR 2020-21 ALSO)

1. TAX RATES

A. TAX RATES APPLICABLE TO INDIVIDUAL AND HINDU UNDIVIDED FAMILY (HUF)

a) Option – I (OLD SCHEME)

Income (Rs.)	Proposed rate of tax (AY 2021-22)
Upto 2,50,000*	Nil
2,50,001-5,00,000	5%
5,00,001-10,00,000	20%
10,00,001 and above	30%

* For Senior Citizen Exemption Limit is Rs.3,00,000 and for Super Senior Citizen (80 years and above) Exemption Limit is Rs. 5,00,000

b) Option – II (NEW SCHEME) (Section 115 BAC)

Income (Rs.)	Proposed rate of tax (AY 2021-22)
Upto 2,50,000	Nil
2,50,001-5,00,000	5%
5,00,001-7,50,000	10%
7,50,001-10,00,000	15%
10,00,001-12,50,000	20%
12,50,001-15,00,000	25%
15,00,001 and above	30%

*NOTE –

i. Refer Para 2 for other terms & conditions of new scheme.

ii. Cess @ 4% is leviable on the amount of income tax and surcharge, if any.

iii. Rebate under Section 87A continues for a resident individual whose total income does not exceed 5,00,000. The amount of rebate is 100% of income tax calculated before cess or 12,500 whichever is less ( There is no mention of amendment of Section 87 A in Finance Bill; Accordingly it appears that deduction under the said section will still be available).

c) Surcharge to be added

Income (Rs.)	(AY 2021-22)
Upto 50 Lakhs	Nil
50 Lakhs – 1 Crore	10%
1 Crore – 2 Crores	15%
2 Crore – 5 Crores	25%
Above 5 Crores	37%

d) EXAMPLES OF TAX PAYABLE UNDER THE CURRENT/NEW REGIME UNDER DIFFERENT CIRCUMSTANCES:

Current Regime	1	2	3	4
Gross Income	15,00,000	15,00,000	15,00,000	15,00,000
HRA exemption [Section 10(13A)]	–	–	3,00,000	–
Standard deduction [Section 16]	50,000	50,000	50,000	50,000
Gross Total Income	14,50,000	14,50,000	11,50,000	14,50,000
Deduction under Section 80C	–	1,50,000	1,50,000	1,50,000
Deduction under Section 80D	–	–	–	50,000
Net Taxable Income	14,50,000	13,00,000	10,00,000	12,50,000
Tax under current regime	2,57,400	2,10,600	1,17,000	1,95,000
Tax under new regime	1,95,000	1,95,000	1,95,000	1,95,000
Gain/Loss under new regime	62,400	15,600	78,000	Nil

B. CORPORATE TAX RATES

Income	Proposed rate of tax (A.Y.2021-22)
Domestic Company having total income less than 1 Crore	30%* / 22%** / 15%***
Domestic Company having total income more than 1 Crore but less than 10 Crores	30%* plus surcharge of 7%
Domestic Company having total income more than 10 Crores	30%* plus surcharge of 12%

Note:

i) Cess @ 4% shall be levied on the above taxes.

ii) *Reduced rate of 25% instead of 30 % shall be applicable where total turnover / receipts in the

Previous Year 2018-19 does not exceed Rs 400 Crores ( Old Scheme ) .

iii) **Reduced tax rate of 22% plus 10% surcharge applicable for companies opting for New

Scheme under section 115BAA (subject to certain conditions)

iv) ***Reduced tax rate of 15% plus 10% surcharge applicable for manufacturing companies

opting for New Scheme u/s 115BAB (subject to certain conditions).

C. FIRMS

Flat tax rate of 30% and surcharge @ 12% of income tax if income exceeds Rs. 1 Cr. ; Further cess @4% will be levied.

2. INDIVIDUAL AND HINDU UNDIVIDED FAMILY (HUF) TAX UNDER NEW SCHEME (SECTION 115BAC)

CONCESSIONAL INCOME TAX RATE FOR INDIVIDUALS AND HUF [w.e.f Assessment Year 2021-22 and onwards]

New Section 115BAC has been introduced in the Act which has provided an option to Individual /HUF to opt for the new tax regime which has following key points:-

a) This is an optional scheme, i.e., assessee may or may not opt for the same in any assessment year.

b) The scheme is for Individual or Hindu Undivided Family

c) The income-tax payable in respect of the total income for any previous year starting from Financial Year 2020-21 and onwards shall be computed at the rates of tax given below:-

Income (Rs.)	Proposed rate of tax (AY 2021-22)
Upto 2,50,000	Nil
2,50,001-5,00,000	5%
5,00,001-7,50,000	10%
7,50,001-10,00,000	15%
10,00,001-12,50,000	20%
12,50,001-15,00,000	25%
15,00,001 and above	30%

d) If the above scheme is adopted, following deductions shall not be allowed:-

i) Leave travel concession u/s 10(5);

ii) House rent allowance u/s 10(13A)

iii) No deduction for any allowance u/s 10(14) ( e.g. Children education allowance for two children @ Rs. 100/- per month ) shall be allowed , except those prescribed below:-

√ Transport Allowance granted to a divyang employee to meet expenditure for the purpose of commuting between place of residence and place of duty;

√ Conveyance allowance granted to employee to meet expenditure on conveyance in performance of duties of office;

√ Any Allowance granted to meet the cost of travel on tour or on transfer;

√ Daily Allowance to meet the ordinary daily charges incurred by an employee on account of absence from his normal place of duty.

iv) Allowances to MPs/MLAs exempt u/s 10(17)

v) Allowance for income of minor u/s 10(32) [Rs. 1,500/-]

vi) Exemption for SEZ unit contained in section 10AA

vii) Standard deduction, deduction for entertainment allowance and employment / professional tax u/s 16 [Rs. 50,000/- , 1/5 th of Salary for Govt. Employees / Rs.5000/-];

viii) Interest upto Rs. 2,00,000/- under section 24 (b) in respect of Self-occupied or vacant property referred to in section 23 (2) ; (Loss under the head income from house property for rented house shall not be allowed to be set off under any other head of Income u/s 71(3A) [Previously allowed upto Rs. 2,00,000/- ] , and would be allowed to be carried forward as per provisions of Section 71 B).

(In the Finance Bill , there is no mention of withdrawal of deduction @ 30 % for repairs u/s 24(a) in respect of Rented Property ; It , therefore, appears that the said deduction will still be available under the new scheme as well )

ix) Additional deprecation u/s 32(1)(iia)

x) Deductions under section 32AD, 33AB, 33ABA

xi) Various deductions for donation or expenditure on scientific research specified in section 35.

xii) Deduction under section 35AD and section 35CCC

xiii) Deduction for family pension to employees’ family on his death u/s 57(iia) ( upto Rs 15,000/- )

xiv) Any deduction under Chapter VIA including following :

a) Deductions u/s 80 C ( for LIC, EPF, PPF, NSC, Super annuation fund , ULIP , Tuition Fees , Payments for purchase / construction of residential house , LIC Annuity Plan , 5 Years’ Term deposit with bank / Post Office , Deposit in Senior Citizen Savings Scheme , etc ) , u/s 80CCC ( for pension funds ) and 80 CCD ( for pension scheme of Central Government ) upto Rs. 1,50,000/- ;

b) Deductions u/s 80D ( health Insurance ) , 80DD, 80DDB, 80E, 80EE ( Interest on loan taken upto Rs. 35 lakhs from any financial institution sanctioned during FY 2016-17 for purchase of residential house property whose value does not exceed Rs. 50 lakhs ) , 80EEA, 80EEB ( Interest on loan taken from financial institution during the period from 1.4.2019 to 31.3.2023 for purchase of electric vehicle) , 80G ( Deduction for donations ) , 80GG ( Deduction for rent paid for residential accommodation ) , 80GGA ( Deduction for donations for scientific research or rural development ) , 80GGC ( Deduction for donations to Political Parties) , 80IA, 80-IAB, 80-IAC, 80-IB, 80-IBA, 80 IC , 80 TTA (Deduction for interest in deposits in Savings Account with Banking Company , Post Office , etc. upto Rs. 10,000/- ), 80 TTB ( Deduction for interest on deposits with Banking Company, Post Office , etc upto Rs. 50,000/- available to Senior Citizens ) , etc.

EXCEPT: Deduction u/s 80CCD(2) (employer’s contribution to NPS Account ) & 80JJAA( Deduction for New Employment) shall be allowed .

e) The assessee should not set off any brought forward losses and unabsorbed depreciation of past years if the same is attributable to any deduction specified above. Also, the assessee is not allowed to set off loss from house property with any other head of income.

> The assesse should not claim any exemption or deduction for allowances or perquisites by whatever name called provided under any other law .

> Exemption for free food and beverage through Vouchers provided to employees has been withdrawn .

It appears from the language of Finance Bill that deduction for Normal Depreciation u/s 32(1) is still avaialable

f) If any of the above conditions are not satisfied in any year, the assessee has to be assessed as per present normal provisions in that year.

g) Where there is a depreciation allowance in respect of a block of assets which has not been given full effect to prior to the assessment year beginning on 1st April, 2021, corresponding adjustment shall be made to the written down value of such block of assets as on 1st April, 2020 in the prescribed manner, if the option is exercised for a previous year relevant to the assessment year beginning on 1st April, 2021;

h) The concessional rate shall not apply unless option is exercised by the Individual or HUF in the form and manner as prescribed hereinbelow :–

> where such individual or HUF has no business income, along with the return of income to be furnished under sub-section (1) of section 139 of the Act ( i.e. by due date of filing of Return ) ; and

> in any other case ( e.,where there is business income ) , on or before the due date specified under sub-section (1) of section 139 of the Act ( i.e. by due date of filing of Return ) for furnishing the return of income for any previous year relevant to the assessment year commencing on or after 1st April, 2021 and such option once exercised shall apply to subsequent assessment years;

i) The option can be withdrawn only once where it was exercised by Individual or HUF having business income for a previous year other than the year in which it was exercised (i.e. First Year) and thereafter, the individual or HUF shall never be eligible to exercise option under this new scheme .

However, the above rule is not applicable to any assessee who does not have/ ceases to have business income.

j) AMT u/s 115 JC shall not apply to such Individual or HUF having business income and opting for new scheme .

3. TAX INCENTIVE FOR AFFORDABLE HOUSING

The existing provisions of section 80EEA provide a deduction in respect of interest up to Rs 1.5 Lakhs on loan taken for residential house property from any financial institution subject to the following conditions:

a) loan has been sanctioned by a financial institution between 1^st April, 2019 to 31st March 2020

b) the stamp duty value of house property does not exceed Rs. 45 Lakhs

c) assessee does not own any residential house property on the date of sanction of loan.

Period of sanctioning of loan by the financial institution is proposed to be extended to 31st March, 2021.

Note : The above deduction shall not be available to assesse if he opts for New Scheme u/s 115 BAC .

[ W.E.F. Assessment Year 2021-22 ]

4. EMPLOYER’S CONTRIBUTION TO PF, SUPERANNUATION FUND AND NPS :

Under the existing provisions of the Act, the contribution by the employer to the account of an employee in a recognized provident fund exceeding 12% of salary is taxable. Further, the amount of any contribution to an approved superannuation fund by the employer exceeding Rs. 1,50,000 is treated as perquisite in the hands of the employee. Similarly, the assessee is allowed a deduction under National Pension Scheme (NPS) for 14% of the salary contributed by the Central Government and 10% of the salary contributed by any other employer.

Presently, there is no combined upper limit for the purpose of deduction on the amount of contribution made by the employer.

Now, it is proposed to provide a combined upper limit of Rs. 7,50,000/- in respect of employer’s contribution in a year to NPS, superannuation fund and recognised provident fund and any excess contribution is proposed to be taxed.

Consequently, it is also proposed that any annual accretion by way of interest, dividend or any other amount of similar nature during the previous year to the balance at the credit of the fund or scheme shall be treated as perquisite to the extent it relates to the employer’s contribution which is included in total income.

[ W.E.F. Assessment Year 2021-22 ]

5. NEW RESIDENCY RULES FOR INDIVIDUALS

It is proposed to amend Section 6 of Income Tax Act so as to provide that –

a) the exception provided in clause (b) of Explanation 1 of sub- section (1) to section 6 for visiting India in that year be decreased to 120 days from existing 182 days (i.e. a Citizen of India or PIO who comes on visit to India now has to spend less than 120 days).

b) As per amended Sec 6(6) , an individual or an HUF shall be said to be “not ordinarily resident” in India in a previous year, if the individual or the manager of the HUF is non-resident in India in 7 out of 10 previous years preceding that year (Previously 9 out of 10 years).

c) an Indian citizen who is not liable to tax in any other country or territory shall be deemed to be resident in India.

Note : As posted by PIB on 2.2.2020 , it has been clarified by Ministry of Finance that in case of an Indian Citizen who becomes resident in India under the above proposed provisions , income earned outside India shall not be taxed unless it is derived from an Indian business or Profession .

[ W.E.F. Assessment Year 2021-22 ]

6. DEDUCTION U/S 80M & 80JJAA ALLOWED TO DOMESTIC COMPANIES UNDER SECTION 115BAA AND 115BAB OPTING FOR 15% OR 22% TAX RATE

a) The Taxation Laws Amendment Act passed in Year 2019 inserted section 115BAA and section 115BAB in the Act to provide domestic companies an option to be taxed at concessional tax rates provided they do not avail specified deductions and incentives. Some of the deductions prohibited are deductions under any provisions of Chapter VI-A under the heading “C. Deduction in respect of certain incomes” other than the provisions of section 80JJAA.

b) Now, it is proposed to amend the provisions of section 115BAA and section 115BAB to allow deduction under section 80JJAA (Deduction in respect of New Employment Generated) and section 80M (Dividend recieved), in case of domestic companies opting for concessional tax rate under these sections.

[ W.E.F. Assessment Year 2020-21 ]

7. TAX AUDIT LIMIT ENHANCED TO RS. 5 CR WITH CONDITIONS

(i) Under section 44AB (a) of the Act, every person ( all assesses ) carrying on business is required to get his accounts audited, if his total sales, turnover or gross receipts, in business exceeds Rs. 1 crore in any previous year ( However there is an exception under First Proviso to Section 44 AB that if an assesse declares his income @ 8 % / 6 % u/s 44 AD , then he need not get his accounts audited if his turnover does not exceeds 2 Crores ) . In case of a person carrying on profession he is required to get his accounts audited u/s 44AB (b), if his gross receipts in profession exceeds Rs. 50 lakhs in any previous year. It is proposed to increase the threshold limit for a person ( all assesses ) carrying on business from Rs. 1 Crore. to Rs. 5 Crores in cases where :-

(ii) aggregate of all receipts ( including amounts received for Sales, etc ) in cash during the previous year do not exceed 5% of such receipts ; and

(iii) aggregate of all payments made ( including amounts incurred for expenditure ) in cash during the previous year do not exceed 5% of such payments .

> It is required that the tax audit report shall be furnished by the said assesse at least one month prior to the due date of filing of return of income. Due date of filing tax audit Report will be 30^th September for all assesses and 31st October in case the assessee is liable for transfer pricing audit ( Corresponding changes have been made in Sec 10 , 10A , 12A, 44AB , 44 ADA ,etc. )

> Further, the due date for filing return of income under section 139 (1) is proposed to be extended to 31st October of the assessment year.

> Distinction between a working and a non-working partner of a firm for the purpose of determining the due date of filing returns has been removed.

> Changes in Monetary limit of Audit for Rs. 1 crore in business and Rs. 50 lakhs in Profession for purposes of TDS have been made in Sec 194 A , 194C, 194 H , 194I , 194J, 206C etc .

[ W.E.F. 1.4.2020 , i.e. Ass. Yr. 2020-21 ]

8. DIVIDEND DISTRIBUTION TAX ABOLISHED [SECTION 115O, 115R, 10(34), 10(35) ETC. ]

It is proposed to carry out amendments so that dividend or income from units are taxable in the hands of shareholders or unit holders at the applicable rate. Now, the domestic company or specified company or mutual funds shall not be required to pay any DDT. It is also proposed to provide that the deduction for expense under section 57 of the Act shall be allowed to assesse upto maximum 20 per cent of the dividend income on shares or dividend income from units.

Further, a new section 80M has been inserted that set off will be allowed only for dividend distributed by the company one month prior to the due date of filing of return, in place of due date of filing return earlier.

Section 194 is also amended to include for tax deduction @ 10% with the threshold limit of Rs. 5,000 instead of Rs. 2,500 for dividend paid other than cash [ W.E.F. 1.4.2020 ]

Note : It has been reported in Times Of India dated 5.2.2020 that “the tax department on Tuesday clarified that the Budget proposal of 10% TDS will be applicable only on dividend payment by mutual funds and not on gains arising out of redemption of Units”

[ W.E.F. Ass. Yr. 2021-22 ]

9. AMENDMENTS RELATING TO CAPITAL GAINS

A. ENHANCED VARIATION LIMIT OF 5 % TO 10% IN 43CA, 50C AND 56

It is provided that where the stamp duty value does not exceed 105% of the consideration received or accruing as a result of the transfer, the consideration so received or accruing as a result of the transfer shall be deemed to be the full value of the consideration.

The aforesaid limit has been increased from 105 % to 110 % .

[ W.E.F. Ass . Yr. 2021-22 ]

B. CHANGE IN FMV AS ON 1-04-2001

As per Section 55 , for computing capital gains in respect of an asset acquired before 1st April, 2001, the assessee had option of either to take the fair market value of the asset as on 1st April, 2001 or the actual cost of the asset as cost of acquisition, whichever is higher .

Now, It is proposed to amend the provision to provide that in case of a capital asset, being land or building or both, the fair market value of such an asset on 1st April, 2001 shall not exceed the stamp duty value of such asset as on 1st April, 2001 where such stamp duty value is available.

[ W.E.F. Ass . Yr. 2021-22 ]

10. EXEMPTING NON-RESIDENT FROM FILING OF INCOME-TAX RETURN

The current provisions of section 115A of the Act provide relief to non-residents from filing of return of income where the non-resident is not liable to pay tax, other than the TDS which has been deducted on the dividend or interest income . The said relief was not available to non-residents whose total income consists of the income by way of Royalty or Fees for technical services (FTS) . Now, the benefit has been extended to Royalty and FTS income as well provided TDS is deducted at rates not lower than prescribed u/s 115 A (1) .

[ W.E.F. Ass . Yr. 2020-21 ]

11. TAX ADMINISTRATION AND COMPLIANCE

A. MODIFICATION OF E-ASSESSMENT SCHEME

E-assessment Scheme, 2019 was notified under section 143(3A) of the Act.

Now, the scope of section 143(3A) has been expanded to include the reference of section 144 of the Act relating to best judgement assessment in the said sub-section.

[W.E.F. 1.4.2020 ]

B. PROVISION FOR E-APPEAL

It is proposed to insert new sub-section (6A) in section 250 of the Act : —

Empowering Central Government to notify an e-appeal scheme for disposal of appeal by CIT(A).

[ W.E.F 1.4.2020 ]

C. STAY BY ITAT ON PAYMENT OF 20%

ITAT may grant stay u/s 254(2A) subject to the condition that the assessee deposits not less than 20% of the amount of tax, interest, fee, penalty, or any other sum payable under the provisions of this Act, or furnishes security of equal amount in respect thereof.

The total stay granted by ITAT cannot exceed 365 days.

[W.E.F. 1.4.2020 ]

12. NEW PENALTY PROVISIONS

A. E-PENALTY

It is proposed to insert a new section 274(2A) so as to provide that the Central Government may notify an e-scheme for the purposes of imposing penalty.

[W.E.F. 1.4.2020 ]

B. PENALTY FOR FAKE INVOICES/ FALSE ENTRIES

It is proposed to introduce provision for levy of penalty on a person, if it is found that in the books of accounts maintained by him there is a :

(i) false entry , or

(ii) any entry relevant for computation of total income of such person has been omitted to evade tax liability.

Penalty shall be equal to aggregate amount of false entry or omitted entry.

It is also proposed that any other person, who causes in any manner a person to make or cause to make a false entry or omits or causes to omit any entry, shall also pay by way of penalty a sum equal to aggregate amounts of such false entry or omitted entry.

The false entries shall include :

(a) false invoice , false piece of documentary evidence , etc .;

(b) invoice in respect of supply or receipt of goods or services without actual supply or receipt of goods or services ;

(c) invoice both to or from a person who do not exist .

[W.E.F. 1.4.2020 ]

C. NEW PENALTY U/S 271K

A new penalty has been proposed u/s 271K to levy penalty of not less than Rs.10,000 to Rs.1,00,000 on charitable institution who fails to provide details of donors within prescribed time or fails to provide to donor certificate of amount of donation .

[W.E.F. 1.6.2020 ]

13. TAX DEDUCTION AT SOURCE (TDS) AND TAX COLLECTION AT SOURCE (TCS)

A. REDUCING THE RATE OF TDS ON FEES FOR TECHNICAL SERVICES (OTHER THAN PROFESSIONAL SERVICES) FROM 10% TO 2%

It is proposed to reduce rate for TDS in section 194J in case of fees for technical services (other than professional services) to 2% from 10%.

[W.E.F. 1.4.2020 ]

B. ENLARGING THE SCOPE OF TDS ON INTEREST U/S 194A

It is proposed that a co- operative society shall be liable to deduct TDS u/s 194A, if-

a) total sales, gross receipts exceed Rs.50 crores during the financial year immediately preceding ; and

b) aggregate amount of such interest is more than Rs. 50,000 in case of payee being a senior citizen and Rs. 40,000 in any other case.

[W.E.F. 1.4.2020 ]

C. NEW TDS ON E-COMMERCE TRANSACTIONS

It is proposed to insert a new section 194O to provide for levy of TDS at the rate of 1% with the following key points:

1. E-commerce operator is required to deduct tax at the time of credit of amount of sale or service to the account of e-commerce participant or at the time of payment, whichever is earlier.

2. Tax at 1% is required to be deducted on the gross amount of such sales or service or both.

3. Sum credited or paid to an e-commerce participant (being an individual or HUF) by the e-commerce operator shall not be subjected to provisions of this section, if the gross amount of sales or services or both of such individual or HUF, through e-commerce operator, during the previous year does not exceed Rs. 5 lakhs and such e-commerce participant has furnished his Permanent Account Number (PAN) or Aadhaar number to the e-commerce operator.

4. There shall not be any further liability on that transaction for TDS. However this exemption shall not be available for hosting advertisements or for providing any other services not connected with sales .

D. NEW TCS ON LRS AND FOREIGN TOURS

a) An authorized dealer ( e.g. Bank )receiving an amount of Rs. 7,00,000 or more in a financial year for remittance out of India under the Liberalized Remittance Scheme ( LRS ) of RBI, shall be liable to collect TCS, @ 5% from remitter .

b) A seller of an overseas tour program package who receives any amount from any buyer, who purchases such package, shall be liable to collect TCS @ 5%.

c) In non PAN/Aadhaar cases the rate shall be 10% in both the cases.

d) The above TCS provision shall not apply if the buyer in aforesaid cases is,

> liable to deduct tax at source under any other provision of the Act.

> Central Government, State Government etc.,

e) “authorized dealer” means a person authorised by the Reserve Bank of India under FEMA Law to deal in foreign exchange.

[ W.E.F. 1.4.2020 ]

E. NEW TCS ON SALES EXCEEDING RS. 50 LAKHS

a) A seller of goods is liable to collect TCS at the rate of 0.1 % on sales consideration received from a buyer in a previous year in excess of Rs. 50 Lakhs.

b) In non-PAN/ Aadhaar cases the rate shall be 1%.

c) Only those sellers whose total sales, gross receipts or turnover from the business exceed Rs. 10 crores during financial year immediately preceding the relevant financial year shall be liable to collect TCS u/s 206 C .

d) No TCS is to be collected from the Central Government, a State Government etc.

e) No such TCS is to be collected, if the seller is liable to collect TCS under other provisions of section 206C or the buyer is liable to deduct TDS under any provisions of the Act and has deducted such amount.

[ W.E.F. 1.4.2020 ]

14. AMENDING DEFINITION OF “WORK” IN SECTION 194C

It is proposed to amend the definition of “work” to provide that in a manufacturing contract, the raw material provided by the assessee or its associate shall fall within the purview of ‘work’ under section 194C. Associate is defined to mean a person falling under the provisions contained in clause (b) of sub-section (2) of section 40A of the Act (i.e. related parties ) .   [ W.E.F. 1.4.2020 ]

15. CHARITABLE TRUST

a) an entity approved, registered or notified under clause (23C) of section 10, section 12AA or section 35 shall be required to apply for approval or registration or intimate regarding it being approved, and on doing so, approval, registration or notification shall be valid for a period not exceeding five previous years at one time calculated from 1st April, 2020.

b) an entity already approved under section 80G shall also be required to apply for approval and approval shall be valid for a period not exceeding five years at one time.

c) deduction under section 80G/ 80GGA to a donor shall be allowed only if a statement is furnished by the donee who shall be required to furnish a statement in respect of donations received and in the event of failure to do so, fee and penalty shall be levied.

d) similar to section 80G of the Act, deduction of cash donation under section 80GGA shall be restricted to Rs 2,000/- only.

[ W.E.F. 1.6.2020 ]

16. RATIONALISATION OF PROVISIONS RELATING TO FORM 26AS

Information such as sale/ purchase of immovable property, share transactions etc. will be provided to the assessee by uploading the same in the registered account of the assessee on the designated portal of the Income-tax Department, so that the same can be used by the assessee for filing of the return of income.

It is proposed to introduce a new section 285BB regarding annual financial statement.

[ W.E.F. 1.6.2020 ]

17. VERIFICATION OF ITR AND AUTHORISED EPRESENTATIVE

It is proposed to amend clause (c) and (cd) of section 140 of the Act so as to enable any other person (other than director / partner), as may be prescribed by the Board to verify the return of income in the cases of a company and a limited liability partnership.

It is proposed to amend Sec 288(2) to enable any other person as may be prescribed by the Board to appear as AR.

[ W.E.F. 1.4.2020 ]

18. TDS/TAX PAYMENT DEFFERED ON INCOME PERTAINING TO EMPLOYEE STOCK OPTION PLAN ( ESOP ) OF START – UPS

Tax / TDS shall be payable after expiry of 48 months from the end of relevant assessment year , date of sale , date on which the assesse ceases to be employee , whichever is earliest .

[W.E.F. 1.4.2020]

19. INSERTION OF TAXPAYER’S CHARTER

It is proposed to insert a new Sec 119A to empower the Board to issue Taxpayer’s Charter and issue such orders , instructions , directions or guidelines to other income tax authorities as may be necessary for administration of the Charter .

[W.E.F. 1.4.2020]

Author: LOKESH JAIN CA, B.Sc.(Hons.)

Disclaimer:

The entire contents of this article have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation. Although care has been taken to ensure the accuracy, completeness, and reliability of the information provided, author assumes no responsibility, therefor. Users of this information are expected to refer to the relevant provisions of applicable Laws. The user of the information agrees that the information is not professional advice and is subject to change without notice. Author assumes no responsibility for the consequences of the use of said information.