1. In order to simplify income tax system, around 70 out of 100 currently available income tax deductions and exemptions have been removed.

2. Dividend Distribution Tax (DDT) abolished and companies are not required to pay any DDT. However, dividend amount is taxable in the hands of recipients at their applicable rates.

3. Concessional corporate tax of 15% extended to Power Generation Companies.

4. Tax Audit turnover threshold u/s 44AB increased from Rs.1 crore to Rs. 5 crores, provided tax payer should not transact more than 5% of business transactions in cash.

5. New tax rates for individuals – Optional and available for those who forgo exemptions/deductions available currently under different sections.

Income Slab Existing Rate New Tax Rate
0-2,50,000 0% 0%
2,50,000-5,00,000 5% (Rebate available) 5% (Rebate continues)
5,00,000 – 7,50,000 20% 10%
7,50,000 – 10,00,000 20% 15%
10,00,000 – 12,50,000 30% 20%
12,50,000 – 15,00,000 30% 25%
> 15,00,000 30% 30%

6. Turnover threshold for Start-up exemption increased from Rs. 25 crores to Rs. 100 crores and period of 7 years extended to 10 years.

7. Concessional tax rate @22% to Co-operative Societies without availing any exemptions and not required to pay any AMT.

8. Presently tax on ESOP received by employees of Start-up applicable at the time of exercise of option. Now, it is deferred (i.e. 5 years or leaving the company or sale whichever is earlier).

9. Currently under different sections (i.e. 50D, 43CA, 56) for real estate transactions, stamp duty value will be considered for tax purpose if the difference between actual consideration and the stamp duty value more than 5%. The same has been increased to 10%.

10. In order to put an end to tax harassment of any citizen, Taxpayer Charter proposed to insert as a part of Statues.

11. 100% tax concession on interest, dividend or capital gains from Sovereign Wealth Funds on investment in infrastructure funds.

12. Concessional withholding tax rate @5% u/s 194LC (i.e. interest payment to non-residents) extended up to 30-June-2023.

13. Concessional withholding tax rate @5% u/s 194LD (i.e. interest on certain bonds) extended up to 30-June-2023 and also extended to municipal bonds with tax rate @4%.

14. Similar to Sabka Vishwas Scheme under GST, Vivad se Vishwaas Scheme introduced in Income Tax Act. Under this scheme, appeals pending before different forums will be withdrawn if tax payer pays disputed tax amount on or before 31-Mar-2020 and no interest or penalty will be charged. Further, this scheme available till 30-June-2020 provided tax payer has to be pay additional amount over and above disputed tax.

15. Government propose to amend Income Tax Act to allow faceless appeals against tax orders similar to faceless assessment.

16. Government extended the time limit to avail additional Rs.1.50 lakhs deduction towards interest on affordable housing loans till 31-Mar-2021.

17. Government proposed to introduce new process for instant allotment of PAN on the basis of Aadhaar.

18. Government propose to simply the ITR forms which will pre-fill the details of donee to avail deduction u/s 80G.

19. Government propose that no manual submission of application by Charitable Institutions for registration/approval under the Income Tax Act and provisional registration number to be issued with validity up to 3 years.

20. Tax holiday period for developers of affordable housing scheme extended by another 1 year.

Team JVN & Associates –  [email protected]

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April 2021