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Highlights of Union Budget 2020-2021

Feb 10, 2020

Prominent Themes of the Budget

Indirect Taxes

Goods & Service Tax (GST)

Custom Act

Economic Announcements

Vivad se Vishwas Scheme

Prominent Themes of the Budget

Governance

Structural Reforms

IBC

GST

Honourable exit through IBC for companies.

  • 20 per cent reduction in turn around time for trucks.
  • Benefit to MSMEs through enhanced threshold and composition limits.
  • Savings of about 4 per cent of monthly spending for an average household.
  • In last 2 years, 60 lakh new taxpayers added and 105 crore e-way bills generated
Digital Revolution

Shift to DBT

Next wave

During 2018- 19, ₹ 7 lakh crore transferred through Direct Benefit Transfer

  • Digital Governance.
  • Improve physical quality of life through National Infrastructure Pipeline
  • Disaster Resilience.
  • Social Security through Pension and Insurance penetration.
Inclusive Growth

Governance guided by “Sabka Saath, Sabka Vikas, Sabka Vishwas” with focus on:

  • Preventive Healthcare: Provision of sanitation and water
  • Healthcare: Ayushman Bharat
  • Clean energy: Ujjawala and Solar Power
  • Financial Inclusion, Credit support and Pension
  • Affordable Hosuing
  • Digital penetration

Financial Sector

Structural Reforms
  • Deposit Insurance Coverage to increase from 1 lakh to Rs. 5 Lakh per depositor.
  • Eligibility limit for NBFCs for debt recovery under SARFAESI Act proposed to be reduced to asset size of 100 crore or loan size of Rs. 50 Lakh.
  • Proposal to sell balance holding of government in IDBI
  • Separation of NPS Trust for government employees from
  • Specified categories of government securities would be opened for non resident investors
  • FPI Limit for corporate bonds to be increased to 15 per
  • New debt ETF proposed mainly for government

Wellness, Water and Sanitation

  • More than 20 000 empanelled hospitals under PM Jan Arogya
  • FIT India movement launched to fight
  • More than 20 000 empanelled hospitals under PM Jan Arogya
  • FIT India movement launched to fight

  • Viability gap funding proposed for setting up hospitals in the PPP
  •   Expansion of Jan Aushadhi Kendra Scheme to all districts by 2024.
  • Coverage under 35 under Nikshay Poshan Yojana(Rs. Lakh)

  • ODF Plus to sustain ODF
  • Focus on liquid and grey water management along with waste management.

Education and Skills

  • About 150 higher educational institutions will start apprenticeship embedded
  • Internship opportunities to fresh engineers urban local
  • Special bridge courses to improve skill sets of those seeking employment
  • Degree level online education programmes for students of deprived sections of the
  • Ind-SAT to be conducted in Asia and Africa under Study in India programme

New Economy

  • Scheme to encourage manufacturing of mobile phones, electronic equipment and semi conductor
  • National Technical Textiles Mission for a period of 4 years.
  • NIRVIK Scheme for higher export credit disbursement
  • Setting up of an Investment Clearance Cell to provide end to end facilitation.
  • Extension of invoice financing to MSMEs through
  • A scheme to provide subordinate debt for entrepreneurs of MSMEs
  • Scheme anchored by EXIM Bank and SIDBI to handhold MSMEs in exports markets.

Infrastructure

  • ational Logistics Policy to be launched soon National Logistics
    Policy to be launched soon.
  • Roads: Accelerated development of Highways
  • Railways: Four station redevelopment projects
  • 150 passenger trains through 1PPP mode.
  • More Tejas type trains for tourist destinations.
  • Port: Corporatised and listing of at least one major port.
  • Air: 100 more airports to be developed under UDAAN.

Power: Efforts to replace conventional energy Efforts to replace conventional energy meters by prepaid smart meters.

 

 

 

Gas Grid: Expand National Gas Grid to 27,000 km

 

 

  • Infrastructure Financing: 103 lakh crore National infrastructure
    Pipeline projects announced.
  • An international bullion exchange to be set up at GIFT

Macro Economic Indicators

Tracing Progress in Numbers

India is the 5th largest economy in the world in terms of GDP at current US $ Trillion.

Budget at a Glance

  • PM KUSUM to cover 20 lakh farmers for stand alone solar pumps and further 15 Lakh for grid connected pumps.
  • Viability gap funding for creation of efficient warehouses on PPP
  • SHG Vill t h SHGs run Village storage scheme to be
  • Integartion of e-NWR with e-NAM.
  • “Kisan Rail” and “Krishi Udaan” to be launched by Indian Railways and Ministry of Civil Aviation respectively for a seamless national cold supply chain for perishables.
  • Elimination of FMD and brucellosis in cattle and PPR in sheep and goat by
  • Increasing coverage of artificial insemination to 70 per
  • Doubling of milk processing capacity by
  • Agricultural credit target of Rs.15 lakh crore for 2020-21.
  • Fish Production target of 200 lakh tonnes by 2022-23.
  • Another 45000 acres of aqua culture to be supported.
  • Fishery extention through 3477 Sagar Mitras and 500 fish FPOs.
  • Raise fishery exports to Rs. 1 lakh crore by 2024- 25.

Caring Society

Women & child, social Welfare

  • More than 6 lakh anganwadi workers equipped with smart
  • A task force to be appointed to recommend regarding lowering MMR
    and improving nutrition

Culture and Tourism

  • Proposal to establish Indian Institute of Heritage and
  • 5 archaeological sites to be developed as iconic
  • A museum on Numismatics and Trade to be established
  • Tribal museum in Ranchi .
  • Maritime museum to be set up at

  • Environment and Climate Change• Coalition for Disaster
    Resilient Infrastructure launched in September
  • Encouragement to states implementing plans for cleaner air in
    cities above 1 million.

Budget Allocation to Major Schemes

Holding period in case of “Immovable property being land or building or both” has been reduced from 3 years to 2 years for the purpose of computing income under head Long term Capital Gain.

Expenditure of major items

Income Tax Top Highlights

  1. New simplified income tax regime with low rates. New tax rate optional for those not availing any exemption.
  2. Dividend distribution tax (DDT) abolished. Dividend to be taxed in the hands of recipient. To allow deduction of dividend received by holding companies from subsidiary.
  3. Corporate tax cut to 15% for power generation companies.
  4. Increase in safe harbour limit from 5% to 10% in case of immovable property sale.
  5. Exemption in filing income tax return for non-residents in case of Royalty & Fees for technical services.
  6. Tax dispute resolution scheme “Vivad se Vishwas” launched for settlement of tax disputes and reduce litigation.
  7. TCS to be collected on sale of goods by the sellers whose turnover exceeds 10 crore @ 0.1%
  8. Due date of filing Income Tax Return is now 31 st October for companies and other tax payers liable for tax audit. Tax audit filing date continues to be 30 th September.
  9. EPF, NPS & Superannuation contribution deduction to be restricted to Rs. 750,000  cummulatively for perks exemption

Corporate Tax Rate

There is no change in tax rate of companies.
Description Existing Rate* Changes proposed
Domestic Company Nil
Regular Tax 5%
Gross Receipts > 400 Crore in FY 2018-19 onwards
  • Total income <= INR1 crore
  • Total income more than INR 1 crore to 10 crore Total income > INR 10 crore
31.24%
33.38%
34.95%
No Change
Gross Receipts > 400 Crore in FY 2018-19 onwards
  • Total income <= INR1 crore
  • Total income more than INR 1 crore to 10 crore Total income > INR 10 crore
26%
27.82%
29.12%
No Change
New manufacturing companies set up and registered on or after 1 October 2019 not availing incentives (Optional) - Section 115BAB (FY 2019-20 onwards) 17.16%
  • Eligible Taxayers can claim deduction with respect to inter- coroprate dividends under Section 80M as introduced in Finance Bill,2020.
  • Power Generation Companies also covered in Section 115BAB
Other domestic companies not availing incentives (Optional) - (FY 2019-20 onwards) 25.17 % Resident Co-operative societies have an option to opt for this new tax regime under Section 115BAD of the Act by foregoing exemptions and deductions.
*includes applicable surcharge and cess
Analysis Of Global Corporate Tax Rates In The World

New Taxtion Regime For Individual Taxation (Optional) – Section 115bac

A new section is proposed which provides an option to Individual and HUF to pay tax as per the following slab rates:

Total Income (Rs.)

Rate

Up to 2,50,000

Nil

From 2,50,001 to 5,00,000

5%

From 5,00,001 to 7,50,000

10 %

From 7,50,001 to 10,00,000

15 %

From 10,00,001 to 12,50,000

20 %

From 12,50,001 to 15,00,000

25 %

Above 15,00,000

30%

The income shall be computed as per the provisions laid below:
Analysis Of Highest Tax Rates Of Individual In The World
  • Deduction and exemptions as follows will not be available:
    • Leave Travel concessions received by the employee from the employer as per the conditions referred in the Section 10(5).
    • House Rent Allowance as referred in the Section 10(13A).
    • Special allowance not in the nature of perquisite incurred to meet the performance of duties by officer. {Sec. 10(14)
    • Daily allowance or any other allowance as mentioned in the section provided to the members of {Sec. 10(17)}
    • Exemption of 1,500 granted to parent for clubbing income of minor. {Sec.10(32)}
    • Special Rebates and Deductions for SEZ’s. {Sec. 10AA}
    • Deductions from salaries (including Entertainment Allowance, standard  deduction  of Rs. 50,000 ) as per the Section 16.
    • Deduction of Interest on Self occupied or vacant property under Section 24(b).
    • Deductions with respect to depreciation on the block of assets of the entity as mentioned in the Section 32(1)(iia).
    • Additional Deduction of 15% of assets WDV to set up a unit in notified backward area u/s
    • Deduction with respect to Tea , Coffee and Rubber units as prescribed under Section 33AB
    • Deduction as provided to Mining and Exploration companies in contract with government subject to conditions as specified in Section 33ABA
    • Deductions as provided to Scientific Institutions on various expenditures as specified in Section
    • Deductions with respect to expenditure of certain specified business as prescribe in the Section
    • Deductions as provided for agricultural Extension Project according to the Section 35CCC
    • Standard Deduction in relation to family pension u/s 57 (iia)
    • Any other deductions and Exemptions under Chapter VI-A (like section 80C, 80CCC, 80CCD, 80D, 80DD, 80DDB, 80E, 80EE, 80EEA, 80EEB, 80G, 80GG, 80GGA, 80GGC, 80IA, 80-IAB, 80-IAC, 80-IB, 80-IBA, etc). However, deduction under sub-section (2) of section 80CCD (employer contribution on account of employee in notified pension scheme) and section 80JJAA (for new employment) can be
  • The option shall be exercised for every previous year where the individual or the HUF has no business income, and in other cases the option once exercised for a previous year shall be valid for that previous year and all subsequent years.
  • The option shall become invalid for a previous year or previous years, as the case may be, if the Individual or HUF fails to satisfy the conditions and other provisions of the Act shall apply.
  • The provisions relating to AMT shall not apply to such individual or HUF having business income.
  • Set off loss of the following shall not be allowed:
    • Carried forward of loses and deprecation of previous years only which had been attributed due to any of the deductions mentioned in above clause
    • Loss from house property from any other head of income

Tax Comparison Old Regime Vs. New Regime

Income of individual

Tax as per old regime {deduction u/s 80C (Rs. 1.5 Lakhs) & 80D (Rs. 0.25 Lakhs) and standard deduction (Rs. 0.5 Lakhs) considered}

Tax as per new regime (no exemption & no deduction)

₹ 5,00,000

₹ 0

₹ 0

₹ 6,00,000

₹ 0

₹ 22,500

₹ 7,00,000

₹ 0

₹ 32,500

₹ 7,50,000

₹ 17,500

₹ 37,500

₹ 8,00,000

₹ 27,500

₹ 45,000

₹ 9,00,000

₹ 47,500

₹ 60,000

₹ 10,00,000

₹ 67,500

₹ 75,000

₹ 11,00,000

₹ 87,500

₹ 95,000

₹ 12,00,000

₹ 1,07,500

₹ 1,15,000

₹ 12,50,000

₹ 1,20,000

₹ 1,25,000

₹ 13,00,000

₹ 1,35,000

₹ 1,37,500

₹ 14,00,000

₹ 1,65,000

₹ 1,62,500

₹ 15,00,000

₹ 1,95,000

₹ 1,87,500

₹ 20,00,000

₹ 3,45,000

₹ 3,37,500

Residential Status

  • There are various individuals who arrange their affairs in such a manner that they are not liable to tax in any country or jurisdiction during a year. This arrangement is typically employed by high net worth individuals (HNWI) to avoid paying taxes to any country/ jurisdiction on income they earn. The current rules governing tax residence make it possible for HNWIs and other individuals, who may be Indian citizen to not to be liable for tax anywhere in the world.
  • Hence, it is proposed that-

    • the exception provided in clause (b) of Explanation 1 of sub-section (1) to section 6 has been changed:
      • 182 days has been replaced with 120 days for determining residency of an Indian citizen or Person of Indian Origin (PIO) who being outside India comes on a visit to India (subject to satisfaction of other conditions).
  • Conditions for Not Ordinarily Resident status is proposed to be modified wherein 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 has been a non-resident in India in 7 out of 10 previous years preceding that year as against 9 out of 10 previous years This new condition to replace the existing conditions in clauses (a) and (b) of sub-section (6) of section 
    Thus in case of person who was non resident in last 3 year or more in last 10 years, he will be resident but not ordinary resident
  • An Indian citizen who is not liable to tax in any other country or territory by reason his domicile or residency shall be deemed to be resident in India. A press release has further clarified the matter

This amendment will take effect from 1st April, 2021 and will, accordingly, apply in relation to the assessment year 2021-22 and subsequent assessment years.

Clarity Over The Surcharge On Income Tax Of Any Person –

  • Amendment was made via Taxation Law Amendment Act, 2019 by which enhanced surcharge was rolled back from the any capital gain so computed under the provision of section-111A & 112A of the The budget now provides for the detailed explanation of the said amendment which has been summarised as following:

Total Income

Surcharge at the rate

Exceeding ₹ 50Lakhs to ₹ 100 Lakhs*

10 per cent

Exceeding ₹ 100 Lakhs to ₹ 250 lakhs*

15 per cent

Exceeding ₹ 250 Lakhs to ₹ 500 Lakhs**

25 per cent

Exceeding ₹ 500 Lakhs and above**

37 per cent

Exceeding ₹ 250 Lakhs***

15 per cent

* Including the income under the provision of Sec-111A & 112A

** Excluding the income under the provision of Sec-111A & 112A

*** Including the income under the provision of Sec-111A & 112A and does not covered in any above range provided

 

Further rate of surcharge on amount of income-tax computed in respect of income chargeable under section 111A and section 112A of the Income-tax Act of income shall not exceed fifteen per cent in any case.

Start- Ups – Section 80iac Of The Income Tax Act

  • 100% profit-linked deduction is eligible for start-ups for income earned from eligible business. The deduction is available at the option for accompanies which incorporated on or after 1 April 2016 and before 1 April
  • With effect from assessment year 2021-22, an eligible start-up can claim deduction for any 3 consecutive assessment years out of 10 years (previously 7 year) from the date of its incorporation provided that its total turnover from the eligible business in the year of deduction does not exceed INR100 crore (previously INR25 crore).

Extension Of Time Limit For Approval Of Affordable Housing Project For Availing Deduction – Section 80-Iba Of The Act.

  • The existing provisions of section 80-IBA of the Act, inter alia, provide that where the gross total income of an assessee includes any profits and gains derived from the business of developing and building affordable housing projects, there shall, subject to certain conditions specified therein, be allowed a deduction of an amount equal to one hundred per cent of the profits and gains derived from such business. The conditions contained in the section, inter alia, prescribe that the project is approved by the competent authority during the period from 1st June, 2016 to 31st March,
  • In order to incentivise building affordable housing to boost the supply of such houses, the period of approval of the project by the competent authority is proposed to be extended to 31st March,

Deduction In Respect Of Interest On Loan Taken For Residential House:

An additional deduction up to INR1.5 lakh will be continued to be provided for purchase of first residential house property, if the loan has been sanctioned between 01 April 2019 and 31 March 2021.
The time limit for loan sanction has been extended from 31 March 2020 to 31 March 2021.

Modification In Conditions For Offshore Funds’ Exemption From “Business Connection”

The Act provides that in respect of an eligible investment fund wherein the fund management activity, if carried out through an eligible fund manager located in India and acting on behalf of such fund, shall not constitute a business connection in India (Section 9A). Further, an eligible investment fund shall not be said to be resident in India merely because the eligible fund manager undertaking fund management activities on its behalf is located in India. The benefit criteria under section 9A are linked to residence of fund, corpus, size, investor broad basing, investment diversification and payment of remuneration to fund manager at arm’s length. 

The following changes will now be made to the prescribed conditions: 

  • for the purpose of calculation of the aggregate participation or investment in the fund, directly or indirectly, by Indian resident, contribution of the eligible fund manager during first 3 years up to twenty-five crore rupees shall not be accounted for; and
  • The cut-off date to satisfy the “monthly average of corpus of fund” condition (i.e., INR 100 crore) for the funds established during the financial year shall be 12 months from the last day of the month of its establishment or

Section 194LC of the Act has been amended to extend the period of concessional rate of 5% of withholding tax to 1st July, 2023 from 1st July, 2020 and also to provide that the rate of TDS shall be four per cent on the interest payable to a non-resident, in respect of monies borrowed in foreign currency from a source outside India, by way of issue of any long term bond or RDB on or after 1st April, 2020 but before 1st July, 2023 and which is listed only on a recognised stock exchange located in any IFSC.

Section 194LD deals with the TDS Liability of the Assessee who is paying Interest on Rupee dominated bonds, Government Securities to a Foreign Institutional Investor or Qualified Foreign Investor on or after 1st June 2013 but before 1st July 2023 (earlier 2020).

  • The applicability of the section has been extended to investment in Municipal Debt Securities (as per SEBI Act, 1992), where the interest has been paid on or after 1st April 2020 but before 1st July
  • Rate of TDS remains same at 5%.

Increase In Safe Harbour Limit In Case Of Immovable Properties From 5% To 10% – Section 43ca, 50c & 56 Of The Act

As per the provision of the Income Tax Act, if consideration from transfer of land or building or both, is less than the stamp duty value and the difference between the two is less than 5% of actual consideration, then the actual sale consideration is deemed to be full value of consideration for the purposes of computation of capital gains and business income. Further, the buyer or recipient of such property is also taxed on the difference amount if the difference is more than 5%

Thus, the present provisions of section 43CA, 50C and 56 of the Act provide for safe harbour of five per cent 

The above safe harbour of difference in stamp duty value and actual consideration is increased to 10% in the hands of both transferor and transferee 

This amendment will take effect from 1st April, 2021 and will, accordingly, apply in relation to the assessment year 2021-22 and subsequent assessment years.

Exempting Non-Resident From Filing Of Income-Tax Return In Certain Conditions

Section 115A of the Act provides for the determination of tax for a non-resident whose total income consists of:

  • certain dividend or interest income;
  • royalty or fees for technical services (FTS) 

The section provides that a non-resident is not required to furnish its income tax return if its total income, consists only of certain dividend or interest income and the TDS on such income has been deducted. 

The relief of non- filing of income tax return has now been extended where the total income consists only of dividend or interest income or Royalty or Fees for Technical Services and TDS on such income has been deducted under the provisions of Chapter XVII-B of the Act at the rates which are not lower than the prescribed rates under sub-section (1) of section 115A.

TDS ON EMPLOYEE STOCK OPTION PLAN (ESOPs) OF START-UPS

ESOPs have been a significant component of the compensation for the employees of start-ups, as it allows the founders and start-ups to employ highly talented employees at a relatively low salary amount with balance being made up via ESOPs. Currently ESOPs are taxed as perquisites under section 17(2) of the Act read with Rule 3(8)(iii) of the Rules.

The taxation of ESOPs is split into two components:

  1. Tax on perquisite as income from salary at the time of
  2. Tax on income from capital gain at the time of

It is proposed to introduce sub-section (1C) in section 192 which defers the liability of eligible start-ups to deduct the tax at source on ESOPs and sweat equity shares. However, TDS has to be deducted within 14 days from the earliest of following:

  • after the expiry of forty-eight months from the end of the relevant assessment year; or
  • from the date of the sale of such specified security or sweat equity share by the assesse; or
  • from the date of the assesse ceasing to be employee of the employer who allotted or transferred him such specified security or sweat equity 

If the TDS is not deducted by the employer being eligible start-up in accordance with the above provisions, then employee shall have to pay income tax directly within the time limit mentioned above u/s. 191.

Inclusion Of Attribution Of Profit To Permanent Establishment In Safe Harbour Rules (Shr) Under Section 92cb & In Advance Pricing Agreement(Apa) Under Section 92cc

The term “safe harbour” means circumstances in which the Income-tax Authority shall accept the transfer price declared by the assessee. 

APA provides tax certainty in determination of ALP for five future years as well as for four earlier years (Rollback). 

SHR provides tax certainty for relatively smaller cases for future years on general terms, while APA provides tax certainty on case to case basis not only for future years but also Rollback years. Both SHR and the APA have been successful in reducing litigation in determination of the ALP. 

The scope of APA and Safe Harbour provisions will be expanded to cover determination of income deemed to accrue or arise in India. 

This could include all income arising to an NR through or from a business connection and PE, or through or from any property or asset or source of income in India, or through a transfer of a capital asset situated in India as well as determining the manner in which income is to be attributable to operations carried on in India. 

The manner of determining the income may include the methods provided under the Income- Tax Rules, 1962, including the prescribed TP method, with adjustments or variations as appropriate. 

The amendment will be effective for APAs entered on or after 1 April 2020, and for Safe Harbour from AY 2020–21

Allowing Deduction For Amount Disallowed Under Section 43b, To Insurance Companies On Payment Basis (Ay 2021-22 & ONWARDS)

Rule 5 of the First Schedule provides for computation of profits and gains of insurance business other than life insurance. In terms of said rules, any expenditure debited to the profit and loss account which is not admissible under the provisions of sections 30 to 43B shall be added back. It is now proposed to insert a proviso after clause (c) to clarify the allowability of deduction for payment of certain expenses specified in section 43B, if they are paid in subsequent previous year.

Tds On E-Commerce Transactions [Section 194-O]

It is proposed to insert a new section 194-O so as to provide for a levy of TDS at the rate of 1% to be deducted by an e-commerce operator on the gross amount of sales or services of an e- commerce participant with the following key points:

• The TDS is to be paid by e-commerce operator for sale of goods or provision of service facilitated by it through its digital or electronic facility or platform.

• E-commerce operator is required to deduct tax at the time of credit of amount of sale or service or both to the account of e-commerce participant or at the time of payment thereof to such participant by any mode, whichever is earlier.

• 1% TDS is required to be deducted on the gross amount of such sales or service or both.
• Any payment made by a purchaser of goods or recipient of services directly to an e- commerce participant shall be deemed to be amount credited or paid by the e-commerce operator to the e-commerce participant and shall be included in the gross amount of such sales or services for the purpose of deduction of income-tax.
• An e-commerce participant being an individual or Hindu Undivided Family is exempt from TDS, if the following conditions are cumulatively satisfied.The exemption is only for sale of goods or services and not for other transaction

• Where the gross amount of sales or services or both does not exceed 50 lakhs
• Upon furnishing of Permanent Account Number (PAN) or Aadhaar number to the e- commerce operator.

• If no PAN or Aadhar is furnished by e-commerce participant then TDS @5%will be applicable
• This amendment will take effect from 1st April, 2020

Tax Collection At Source (Tcs)

The tax collection mechanism will now be extended to cover the following persons
Transaction Type Quantum Of Transaction Who To Deduct Tcs Tcs Rate Rate In Case Of No Pan And Aadhar
Sale of goods* >50 lakhs Seller of goods whose turnover exceeds 10crore 0.1% 1%
Sum paid by the buyer of overseas tour package - Tour Operator 5% 10%
Remittance outside India under the LRS scheme Aggregate sum remitted is Rs. 7 lakh or more during FY Authorized dealer 5% 10%

Tax Treatment Of Employer’s Contribution To Recognized Provident Funds, Superannuation Funds And National Pension Scheme

Under the existing provisions of section 17(2)(vii), contribution by employer to recognised provident fund (RPF), approved superannuation fund and National Pension Scheme (NPS) is taxable as under:

Particulars

Taxable Portion

In case of RPF

Amount in excess of 12% of (Basic salary + Dearness allowance)

In case of Superannuation Fund

Amount in excess of ` 1,50,000/-

In case of NPS

Amount in excess of 10% of (Basic salary + Dearness allowance)

From, AY 2021-2022, it is proposed that aggregate amount of exempted perquisite in respect of above 3 items is restricted to a maximum of 7,50,000/- per annum.

Further, any dividend, interest or any other accretion earned on the abovementioned funds shall also be treated as perquisites if the same relates to the amount which is included in the total income under section 17(2)(vii) in any previous year.

Widening The Scope Of Commodity Transaction Tax (Ctt)

The scope of taxable commodities transaction attracting levy of CTT widened to include new derivative products i.e. option in goods and commodities futures based on prices or indices of prices of commodity futures.

Transaction

CTT Rate

Sale of a commodity derivative based on prices or indices of prices of commodity derivatives

0.01% payable by seller

Sale of an option in goods resulting in actual delivery of goods

0.0001% payable by purchaser

Sale of an option in goods resulting in a settlement otherwise than by the actual delivery of goods

0.125% payable by purchaser

Reference To Dispute Resolution Panel [Section 144c]

It is proposed that the provisions of section 144C of the Act may be suitably amended to:-

  • include cases, where the AO proposes to make any variation which is prejudicial to the interest of the assessee, within the ambit of section 144C;
  • expand the scope of the said section by defining eligible assessee as a non-resident not being a company, or a foreign 

Amendment to Sec. 144C to cover any variation (as opposed to earlier variation only to ‘income or loss’) that is prejudicial to assessee and expanding the scope of ‘eligible assessees’ to foreign entities not being a company, or a foreign company – Impacts HC decision in [TS-164- HC-2016(DEL)] and ITAT ruling in [TS-36-ITAT-2020(CHNY)]

Clarity On Stay By The Income Tax Appellate Tribunal (Itat)

  • It is provided that ITAT may grant stay of demand of tax 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 furnish security of equal amount in respect thereof.
  • It is also proposed that no extension of stay shall be granted by ITAT, where such appeal is not so disposed of which the said period of stay as specified in the order of Stay.
    However, on an application made by the assessee, a further stay can be granted, if the delay in not disposing of the appeal is not attributable to the assessee and the assessee has deposited not less than 20% of the amount of tax, interest, fee, penalty, or any other sum payable under the provisions of this Act, or furnish security of equal amount in respect thereof.
    The total stay granted by ITAT cannot exceed 365 days.
  • The above amendment in Section 254(2A) of the Act making payment of 20% of the demand as pre-condition before ITAT to consider a plea for stay impact Supreme court ruling in LG Electronics India Pvt Ltd [TS-406-SC-2018]
    • SC clarifies that CBDT’s office memorandum (‘OM’) dated July 31, 2017 regarding stay of demand does not interfere with AO’s power to grant stay on deposit of a lesser amount, pursuant to Revenue’s appeal challenging Delhi HC judgment in LG Electronics India Pvt. Ltd.’s (‘assessee’) case; SC gives credence to Additional Solicitor General Vikramjit Banerjee’s submission before it that the said administrative Circular of the CBDT will not operate as a ‘fetter’ on the Commissioner, since it is a quasi judicial authority; Disposing off Revenue’s appeal, SC clarifies that “in all cases…it will be open to the authorities, on the facts of individual cases, to grant deposit orders of a lesser amount than 20%, pending appeal. ”

Aligning Purpose Of Entering Into Double Taxation Avoidance Agreements (Dtaa) With Multilateral Instrument (Mli)

In order to align with the purpose of Article 6 (purpose of Covered Tax Agreement) of MLI to which India is a signatory, it is proposed to amend clause (b) of sub-section (1) of section 90 to provide that the Central Government may enter into said agreement for the avoidance of double taxation without creating opportunities for non-taxation or reduced taxation through tax evasion or avoidance (including through treaty-shopping arrangements aimed at obtaining reliefs provided in the said agreement for the indirect benefit to residents of any other country or territory).

It is also proposed to make similar amendment in clause (b) of sub-section (1) of section 90A.

Income Deemed To Accrue Or Arise In India [Section 9]

  • Deferring of “Significant Economic Presence” (‘SEP’)
    • The Finance Act, 2018, inserted new explanation to Section 9 to clarify that the SEP of a non-resident in India shall constitute “business connection” in India although it was a non-recommended option for countries to
    • Discussions on the issue of taxation of digital/digitized businesses is undergoing in G20-OECD BEPS project of which India is a participant. The report on the same is expected by the end of December 2020 after consensus is development among various
    • Hence, the SEP provisions will be deferred by one The provisions will now apply from financial year starting 1 April 2021.
  • Extending “Source Rule”
    • The business connection rule and source rule has now been extended to include:
    • Income from advertisement
    • Income from sale of data collected from a person who resides in India or from a person who uses internet protocol address located in India
    • Income from sale of goods or services using data collected from a person who resides in India or from a person who uses internet protocol address located in
  • Aligning exemption from taxability of Foreign Portfolio Investors (FPIs), on account of indirect transfer of assets, with amended scheme of Securities and Exchange Board of India (SEBI) 
    • The exemption from taxability of FPIs, on account of indirect transfer of assets is aligned with the amended scheme of SEBI:
    • Grandfathering of exception to capital asset held by nonresident by way of investment in erstwhile Category I and II FPIs under the SEBI (FPI) Regulations, 2014
    • Extension of similar exemption to investment in Category-I FPI under the SEBI (FPI) Regulations, 2019
  • Definition Of Term Royalty
    • As per the provisions of Section 9(1)(vi) the term “royalty, means the transfer of all or any rights (including the granting of a licence) in respect of any copyright, literary, artistic or scientific work including films or video tapes for use in connection with television or tapes for use in connection with radio broadcasting, but not including consideration for the sale, distribution or exhibition of cinematographic films.
    • Due to exclusion of consideration for the sale, distribution or exhibition of cinematographic films from the definition of royalty, such royalty is not taxable in India even if the DTAA gives India the right to tax such royalty
    • Hence, it is proposed to amend the definition of royalty so as not to exclude consideration for the sale, distribution or exhibition of cinematographic films from its meaning.
    • Amendment to Sec. 9(1)(vi) expanding the scope of ‘royalty’ to include income from sale, distribution, exhibition of cinematographic films – Overrules HC decision in K.Bhagyalakshmi [TS-647-HC-2013(MAD)] and ITAT ruling in Warner Brother Pictures Inc[TS-787-ITAT-2011(Mum)].

Removing Dividend Distribution Tax (Ddt) And Moving To Classical System Of Taxing Dividend In The Hands Of Shareholders/Unit Holders

Section 115-O provides for levy of additional income tax at the rate of 15% plus surcharge and cess on any amount declared, distributed or paid by a domestic company by way of dividend, whether out of current or accumulated profits.

It is proposed that no DDT shall be paid on the dividend declared, distributed or paid after 31st March 2020. Hence, dividend or income from units are taxable in the hands of shareholders or unit holders at the applicable rate and the domestic company or specified company or mutual funds are not required to pay any DDT. It is also proposed to provide that the deduction for expense under section 57 of the Act shall be maximum 20 per cent of the dividend or income from units

It will have following impact:

  • Exemption of Section 10(34) withdrawn
  • Amend section 115R to provide that the income distributed on or before 31st March, 2020 shall only be covered under the provision of this section
  • Amend Section 10(35) to provide that the provision of this clause shall not apply to any income, in respect of units, received on or after 1st April,
  • Amend section 10(23FC) so that all dividends received or receivable by business trust from a special purpose vehicle is exempt income under this clause
  • Amend section 10(23FD) to exclude dividend income received by a unit holder from business trust from the exemption so that the dividend income is taxable in the hand of unit holder of the business
  • insert new section 80M to remove the cascading affect, with a change 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
  • Amend section 115BBDA which taxes dividend income in excess of ten lakh rupee in the hands of shareholder at ten per cent., to only dividend declared, distributed or paid by a domestic company on or before the 31st day of March,
  • Amend section 57 to provide that no deduction shall be allowed from dividend income, or income in respect of units of mutual fund or specified company, other than deduction on account of interest expense and in any previous year such deduction shall not exceed twenty per of the dividend income or income from units included in the total income for that year without deduction under section 57.
  • Amend section 194 to include dividend for tax At the same time the rates of ten per cent. is proposed to be prescribed and threshold is proposed to be increased from Rs 2,500/- to Rs 5,000/- for TDS on dividend paid other than cash. Further, at present the mode of payment is given as “an account payee cheque or warrant”. It is proposed to change this to any mode.
  • Amend section 194LBA to provide for tax deduction by business trust on dividend income paid to unit holder, at the rate of ten per for resident. For non-resident, it would be 5 per cent for interest and ten per cent. for dividend.
  • Amend section 195 to delete exemption provided to dividend referred to in section 115-O etc.

Tax Audit

Threshold for tax audit will be increased to INR5 crore for taxpayers carrying on business, provided cash transaction of the assessee is less than 5% in value for all receipts and 5% in value for all payments.

It may be noted that tax payer for turnover upto 200 Lakhs will also have to meet the condition of a minimum income declared of atleast 8% (6% in case of digital transactions) in terms of section 44AD to be exempt from Audit requirement.

This amendment will take effect from 1st April, 2020

This amendment will take effect from 1st April, 2020

This amendment will take effect from 1st April, 2020

Due Date Of Filing Return Of Income

  • The due date of filing return of income for companies and other taxpayers liable to tax audit (other than taxpayers who are required to file a transfer pricing report) will be 31 October (instead of 30 September) of the following financial
  • The due date of filing return for a working and a non-working partner of a firm will also be 31st October.

Vivad Se Vishwas Scheme

  • In order to reduce the tax litigations considering the direct tax cases pending in various Appellate forums i.e. Commissioner (Appeals), ITAT, High Court and Supreme Court, it is proposed to introduce Vivad se Vishwas Scheme in line with the Sabka Vishwas Scheme introduced under indirect
  • Under the proposed ‘Vivad Se Vishwas’ scheme, a taxpayer would be required to pay only the amount of the disputed taxes and will get a complete waiver of interest and penalty provided he pays by 31st March, Those who avail this scheme after 31st March, 2020 will have to pay some additional amount. The scheme will remain open till 30th June, 2020.
  • A detailed note is enclosed on page 51

Other Miscellaneous Amendments:

  • The definition of term “business trust” has been amended so as to include the units of business trust that are not listed on recognised stock
  • TDS on fees for technical services as defined in terms of Act (other than professional services) paid to residents, will be reduced from 10% to 2% under Section 194J with effect from 1 April
  • TDS will be applicable in case of cooperative society making payment or credit of interest (other than interest on securities) to any resident of India, provided:
    • The total sales, turnover or gross receipts of cooperative society exceeds 50 crore in the financial year immediately preceding the year in which payment is made or interest is
    • The aggregate amount of interest exceeds INR50,000 in case of senior citizen payee and INR40,000 in any other case.
  • TDS  on        Payment         to         Contractors         [Section         194C]: It is proposed to amend the definition of “work” to provide that in a contract manufacturing, the raw material provided by the assessee or its associate shall fall within the purview of the ‘work’ under section
    Further, the term ‘Associate’ is now defined to mean a person who is placed similarly in relation to the customer as is the person placed in relation to the assessee.
  • e-Appeals will be enabled in line with faceless assessment, reducing human intervention and improving taxpayers’ experience with the Commissioner (Appeals).
  • e-penalty will be enabled in line with faceless assessment, reducing human intervention and improving taxpayers’ experience
  • In cases of information received from the prescribed authority, the survey operations can be conducted only with the prior approval of Joint Director or Joint In any other case, the surveys are to be conducted with prior approval of Commissioner or Director.
  • Filing of statement of donation by donee in their tax returns, to cross-check claim of donation by donor
  • The prescribed income-tax authority or the person authorised by such authority to upload  in the registered account of the assessee a statement in such form and manner and setting forth such information, which is in the possession of an income-tax authority (In terms of AIR or other requirement). This information will be displayed in Form 26AS.
  • Penalty for fake invoice:
    Levy of penalty on a person if it is found during any proceeding under the Act that in the books of accounts maintained by him there is a
    • false entry or (ii) any entry relevant for computation of total income of such person has been omitted to evade tax liability.
      The penalty payable by such person shall be equal to the aggregate amount of false entries or omitted entry.
      It is also propose to provide 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 which is equal to the aggregate amounts of such false entries or omitted entry.

      The false entries is proposed to include use or intention to use –

      • forged or falsified documents such as a false invoice or, in general, a false piece of documentary evidence; or
      • invoice in respect of supply or receipt of goods or services or both issued by the person or any other person without actual supply or receipt of such goods or services or both; or
        • invoice in respect of supply or receipt of goods or services or both to or from a person who do not exist.
  • Trust/ Institution  /  Fund/  NGO The institution which are currently entitled to exemption from Income Tax in terms of Section 10(23C) o Section 11 of the Income Tax Act, 1961 will be required to obtain a fresh registration within 3 months if they are already registered with tax department and such registration will require renewal every 5 year.

Goods & Service Tax (GST) Proposals

Union Territory Definition

Definition of Union Territory has been amended to include Ladakh.

Composition scheme -Eligibility

Certain specified suppliers of goods or services (namely suppliers of goods and services not leviable to tax, suppliers making inter-state supply or suppliers supplying goods through e- commerce platforms) were not eligible to opt for the composition scheme. The said provision have been extended to include suppliers of ‘goods’ and/or ‘services’ as well in the said cases to be eligible for opting Composition Scheme;

Condition for availing Input Tax Credit

Earlier the time limit for availing ITC in respect of a debit note was dependent on the invoice pertaining to that debit note. Now the provisions have been amended as per which the time limit for availing ITC in respect of a debit note would depend on the period to which the debit note pertains.

Cancellation Or Suspension Of Registration

Provision relating to cancellation (or suspension) of registration have been extended to apply to registered persons who voluntarily obtained GST registration.

Revocation Of Cancellation Of Registration

Provision relating to the time limit for filing application for revocation of cancellation of registration (time limit of 30 days) has been amended to enable the Additional Commissioner or the Joint Commissioner to extend such time limit by an additional 30 days. The Commissioner has been granted powers to further extend such period by 30 days.

TAX Deduction at Source Certificate.

Provisions relating to furnishing of certificate of tax deduction at source have been amended wherein the Government would prescribe the form and manner in which certificate of tax deduction at source is required to be issued.

Further, provision relating to late fee in case there is delay in furnishing of such certificate has been omitted.

Punishment for Offence to cover Beneficiary also

Punishment for offences will be extended to also cover a person who causes to commit the offence and retains benefit arising from such offence.

Cognizable And Non-Bailable Offence

Fraudulent availment of Input Tax Credit (ITC) without invoice will be made cognizable and non-bailable offence.

Tax Invoice

Provision relating to tax invoice in case of supply of services has been amended to enable the Government to specify the categories of services or supplies in respect of which a tax invoice shall be issued, within such time and in such manner as may be prescribed.

 

Constitution of Appellate Tribunal for J & K

Provision related to Constitution of Appellate Tribunal and Benches thereof has been amended to empower the Government for specifying a Bench of Appellate Tribunal for the State of Jammu and Kashmir.

Condition for availing Input Tax Credit

Provision related to Constitution of Appellate Tribunal and Benches thereof has been amended to empower the Government for specifying a Bench of Appellate Tribunal for the State of Jammu and Kashmir.

Transitional Arrangements For Input Tax Credit

Retrospective amendments in transitional arrangements for ITC have been introduced to mandate the law for restricting the time limit for availing ITC.

Extend The Time Limit For Passing Order For Removal Of Difficulties Relating To Act

Provision relating to removal of difficulties has been amended to extend the time limit provided for removal of difficulties thereunder from three years to five years, with effect from the date of commencement of the said Act.

Schedule II – Activities or Transaction to be treated as Supply of Goods or Supply of Services

In Schedule II paragraph 4 has been amended to omit the words “whether or not for consideration” so as to give clarity to the meaning of the entries (a) and (b) of said paragraph.

Refund Of Accumulated Compensation Cess On Tobacco Products

The refund of accumulated credit of compensation cess on tobacco products arising out of inverted duty structure in Compensation Cess is disallowed w.e.f October 1, 2019 vide Notification No. 31/2019- Compensation Cess (Rate) dated September 30, 2019.

The Bill seeks to give retrospective effect to the above notification w.e.f. July 1, 2017 onwards. Accordingly, no refund on account of inverted duty structure would be admissible on any tobacco products.

Rates Changes Related To Fishmeal, Pulley , Wheels Etc.

Seeks to provide retrospective exemption from CGST on supply of fishmeal, during the period from July 1, 2017 up to September 30, 2019 (both days inclusive).

It further seeks to retrospectively levy CGST at the reduced rate of 6% on supply of pulley, wheels and other parts (falling under heading 8483) and used as parts of agricultural machinery of headings 8432, 8433 and 8436 during the period from the July 1, 2017 up to December 31, 2018 (both days inclusive).

It also seeks to provide that no refund shall be made of the tax which has already been collected. 

Prohibition On Other Goods Also

The power to prohibit uncontrolled import or export of gold or silver, for prevention of injury to Indian economy, has now been extended to “any other goods”.

Importer Place Of Origin

Importers will be made responsible to ensure compliance with prescribed Rules of Origin in case of imports at concessional duty rates under Preferential Trade Agreements.

Health Cess

In order to promote Indian health care manufacturing industry, health cess will be imposed at 5% on import of various medical devices.

  • Cess will be computed on value of goods
  • Export promotion scrips cannot be used for payment of cess.

Electronic Duty Credit Ledger

Duty credit will be introduced in lieu of duty remission given in respect of exports or other specified financial benefits.

  • This duty credit shall be maintained in customs automated system in the form of an electronic duty credit
  • The credit can be used by the person to whom it is issued or the person to whom it is transferred, toward payment of customs duties, subject to prescribed

Safeguard Duty Measures

Provisions relating to safeguard measures in case of surge in quantity of import or under such conditions that cause serious injury to domestic industry are being revamped.

  • Measures will now include application of a Tariff Rate Quota, imposition of a Safeguard Duty or any other measure that the Government may consider
  • Tariff Rate Quota measures, where used, shall not be fixed lower than average level of imports in last 3 representative years for which statistics are available, unless a different level is deemed necessary

Custom Act, Proposals

Sl. No. Commodity
Rate of Duty
From To

Toys

28. Tricycles, scooters, pedal-cars and similar wheeled-toys; dolls carriages; dolls; other toys; reduced-size (“scale”) models and similar recreational models, working or not; puzzles of all kinds 20% 60%

Stationary items

29. Filing, cabinets, card-index cabinets, paper- trays, paper rests, pen trays, office-stamp stands and similar office or desk equipment, of base metal, other than office furniture of heading 9403 10% 20%
30. Fittings for loose-leaf binders or files, letter clips, letter corners, paper clips, indexing tags and similar office articles, of base metal; staples in strips (for example, for offices, upholstery, packaging), of base metal 10% 20%
31. Sign-plates, name-plates, address-plates and similar plates, numbers, letters and other symbols, of base metal, excluding those of heading 9405 10% 20%

Miscellaneous

32. Artificial Flowers; Glass Beads; Bells, gongs, statuettes, trophies and like, non- electric of base metal; statuettes and other ornaments of base metal; photograph, picture or similar frames, of base metal; mirrors of base metal. 10% 20%

Other Proposals Involving Changes In Basic Customs Duty Rates in Respective Notification

Sl. No. Commodity
Rate of Duty
From To

Animals

1. Pure-bred breeding horses 30% Nil

Fuels, Chemicals and Plastics

2. Very low Sulphur fuel oil meeting ISO 8217:2017 RMG380 Viscosity in 220-

400 CST standards/marine Fuel Oil 0.5% (FO), under the same conditions as available to IFO 180 CST and IFO 380 CST under entry at S. No. 139 of notification No. 50/2017–Customs dated June 30, 2017.

10% Nil
3. Calcined Petroleum Coke 10% 7.5%
4. Colloidal precious metals; compounds of precious metals; amalgams of precious metals 7.5% 10%
5. Butyl Acrylate 5% 7.5%
6. Polyester Liquid Crystal Polymers (LCP) for use in manufacture of connectors 7.5% Nil
7. Calendared plastic sheets for use in manufacturing of smart cards 10% 5%

Paper Industry

8.
  • Newsprint, if the importer, at the time of import is an establishment registered with the Registrar of Newspapers, India (RNI)
  • Uncoated paper used for printing newspaper, if the importer, at the time of import is an establishment registered with the Registrar of Newspapers, India (RNI)
  • Lightweight coated used for printing magazines, subject to end-use conditions
10% 5%

Sports Goods

9.

List of items allowed duty free import up to 3% of FOB value of sports goods exported in the preceding financial year is amended to include Willow

Applicable rate Nil

Precious Stones and Metals

10.

Gold used in the manufacture of semiconductor devices or light emitting diodes

Nil

12.5%

11.

Rubies, emeralds, sapphires – unset and imported uncut, Rough coloured gemstones, Rough semi-precious stones, Pre-forms of precious and semi- precious stones, Rough synthetic gemstones, Rough cubic zirconia

Nil

0.5%

12.

Polished Cubic Zirconia

5%

7.5%

13.

Platinum or Palladium used in manufacture of-

  • All goods, including Noble Metal Compounds and Noble Metal Solutions [2843]
  • Catalyst with precious metal or precious metal compounds as the active substance [3815 12]

12.5%

7.5%

14.

Spent Catalyst/Ash containing precious metal like gold from which such precious metal is retrieved subject to specified conditions.

12.5%

11.85%

Machinery

15.

Goods specified in List 10 of Notification No. 50/2017 – Customs dated June 30, 2017, required for use in high voltage power transmission project

5%

7.5%

16.

Rotary tillers/weeder

2.5%

7.5%

17.

Goods specified in List 14 of Notification No. 50/2017 – Customs dated June 30, 2017, required for construction of road like paver finisher, machines for filling up cracks in roads, mobile bridge inspection units etc.

Nil

Applicable BCD

18.

Motors like Single Phase AC motors, Stepper motors, Wiper Motors etc.

7.5%

10%

Electronic goods, parts thereof

19.

Copper and articles thereof used in manufacturing of specified electronic items

Nil

Applicable BCD

20.

Specified Chargers and power adapters

Applicable BCD

20%

21.

PCBA of Cellular mobile phones (w.e.f. April 1, 2020)

10%

20%

22.

Fingerprint readers for use in Cellular mobile phones

Nil

15%

23.

Vibrator/Ringer of Cellular mobile phones Display Panel & Touch Assembly of Cellular mobile phones (w.e.f. October 1, 2020)

Nil

10%

24.

Display Panel & Touch Assembly of Cellular mobile phones (w.e.f. October 1, 2020)

Nil

10%

25.

Headphones and Earphones

Applicable BCD

15%

26.

Following parts of Microphone for use in manufacture of Microphone namely, microphone cartridge; microphone holder; microphone grill; microphone body etc.

10%

10%

27.

Micro-fuse base, sub-miniature fuse base, Micro-fuse Cover and sub-miniature fuse cover for use in manufacture of micro fuse and sub-miniature fuse.

7.5%

Nil

Automobile and automobile parts

28.

Noble metal solutions and noble metal compounds used in manufacture of catalytic converter and their parts

5%

Applicable BCD

29.

Platinum or Palladium used in manufacturing of catalytic converter and their parts

5%

Applicable BCD

30.

  • Parts of catalytic converter for manufacture of catalytic converters.
  • The following goods for use in the manufacture of catalytic converters and its parts, namely: - Raw substrates (ceramics); Wash coated substrates (ceramics); Raw substrates (metal); Wash coated substrates (metal); Stainless steel wire cloth stripe; Wash coat

5%

7.5%

Electronic goods, parts thereof

31.

Completely Built Units of commercial vehicles (other than electric vehicles) (w.e.f. April 1, 2020)

30%

40%

32.

Completely Built Units of commercial electric vehicles (w.e.f. April 1, 2020)

25%

40%

33.

Semi Knocked Down forms of electric passenger vehicles (w.e.f. April 1, 2020)

15%

30%

34.

Semi Knocked Down forms of electric vehicles- Bus, Trucks and Two wheelers (w.e.f. April 1, 2020)

15%

25%

35.

Completely Knocked Down forms of electric vehicles - Passenger vehicles, Three wheelers, Two wheelers, Bus & Trucks (w.e.f. April 1, 2020)

10%

15%

Defence sector

36.

Exemption from import duty for specified military equipment, when imported by Defense PSUs and other PSUs for defence forces.

As applicable

Nil

Increase In National Calamity Contingent Duty (NCCD) On Cigarettes And Tobacco Products

National Calamity Contingent Duty is levied as a duty of excise on certain manufactured goods specified under the Seventh Schedule of Finance Act, 2001. NCCD is being proposed to be increased on tobacco products (except bidi) as detailed below:

  • On cigarettes, NCCD is being increased ranging from ` 200 – 735 per thousand, depending upon length of cigarette and on filter/non-filter
  • On smoking mixtures for pipes and cigarettes, NCCD is being increased from 45% to 60%.
  • On other forms of smoking tobacco (other than smoking mixtures for pipes and cigarettes)and forms of chewing tobacco, NCCD is being increased from 10% to 25%.
  • NCCD on Bidis remains

Amendment in the First Schedule of the Customs Tariff Act, 1975

First Schedule to the Customs Tariff Act, 1975 is being amended to:

  • Create new tariff item 8414 51 50 for “Wall fans”. The tariff rate for this item is 20% and BCD on wall fans is being increased from 5% to 20%
  • Create new tariff item 8529 90 30 for “Open Cell of television set”. The tariff rate for this item is 15%. However, these items will continue at ‘Nil’
  • Create tariff items 8541 40 11 for “Solar Cells, not assembled” and tariff item 8541 40 12 for “Solar Cells assembled in modules or made up into panels”. The tariff rate for these items is 20%. However, these items will continue at ‘Nil’

Economic Announcements

Infrastructure

  • 100 lakh crore invested on infrastructure over the next five More than 6500 projects in the field of housing, safe drinking water healthcare, world class education etc contemplated.
  • National Logistics Policy will soon be released, creating single window e-logistics
  • Accelerated development of highways will be undertaken; Delhi-Mumbai expressway and two other projects to be completed by Chennai-Bengaluru Expressway to be started.
  • NHAI to monetize 12 lots of highway bundles of over 6,000 km before
  • 5 new Smart cities to be set up via PPP
  • Rs 70 lakh crore allocated to transportation for the year 2020-21.
  • 100 more airports to be set up by 2024 to support UDAN
  • Young engineers and management graduates will be roped in for infrastructure projects under Project Preparation
  • Investment Clearance Cell to set up through a portal, will provide end-to-end facilitation, support and information on land banks
  • Jal Vikas Marg on National Waterway-1 will be completed, further, the 890KM Dhubri-Sadiya connectivity will done by
  • Conceptualized “Arth Ganga” plans are afoot to energize economic activity along river banks.
  • Upstream sector of oil and gas, the Open Acreage Licensing Policy (OALP) is a success having awarded 1,37,000 sq km for exploration to private sector and to the City gas distribution rights are also awarded.
  • proposed to expand the national gas grid from the present 16200 km to 27000 km
  • New Scheme NIRVIK is being launched, which provides for higher insurance coverage, reduction in premium for small exporters and simplified procedure for claim settlements.
  • 27,300 crore for development and promotion of Industry and Commerce for the year 2020-  21

Telecom Sector

  • Rs 6,000 crore for BharatNet programme; optical fiber to Home connections under BharatNet will be provided to 1 lakh gram panchayats this year itself
  • New policy for private sector to build Data Centre Parks.
  • 8000 crore over a period five years for the National Mission on Quantum Technologies and Applications.

Tourism Sector

  • 5 archaeology sites to be developed as iconic sites with on-site Museums:-
    • Rakhigarhi (Haryana)
    • Hastinapur (Uttar Pradesh)
    • Shivsagar (Assam)
    • Dholavira (Gujarat)
    • Adichanallur (Tamil Nadu)
  • 3150 crore proposed for Ministry of Culture for 2020-21.
  • Rs 2,500 crore for tourism
  • Re-curation of the Indian Museum in Kolkata, which is the oldest in the
  • An Indian Institute of Heritage and Conservation under Ministry of Culture proposed; with the status of a deemed
  • 4 more museums from across the country to be taken up for renovation and re-curation.
  • Maritime museum to be set up at Lothal- the Harrapan age maritime site near Ahmedabad, by Ministry of

Energy Sector

  • Expansion of National Gas Grid from 16,200 km to 27,000 km along with reforms to deepen gas markets, enable ease of transactions and transparent price discovery
  • Rs 22,000 crore allocated to to power and renewable
  • Advise to shut thermal plants if they don’t meet emission

Railways Sector

  • Large solar power capacity to be set up alongside rail tracks, on land owned by Railways
  • More Tejas-like trains for
  • 150 new train to be introduced on PPP basis; Four stations will be also be redeveloped with the help of
  • High speed train between Mumbai to Ahmedabad.
  • Rs 18,600 crore worth Bengaluru suburban transport project launched; 20% equity will be provided by the Centre.

Education AND Skills Sector

  • New Education Policy to be announced
  • 150 higher educational institutions to start apprenticeship embedded degree/diploma courses by March
  • Degree-level full-fledged online education programme to be offered by institutes in top 100 in National Institutional Ranking Framework
  • US-like SAT exam to be held in African and Asian countries for benchmarking foreign candidates who wish to Study In India
  • National Police University and National Forensic Science University proposed for policing science, forensic science, and cyber-forensics.
  • A medical college to be attached to a district hospital in PPP mode, viability gap funding to be set up for setting up such medical
  • Rs 99,300 crore allocated for education sector, Rs 3,000 crore rupees for skill development
  • External commercial borrowings and FDI to be leveraged to improve the education
  • To bring in equivalence in the skill sets of the workforce and employers’
  • To launch 2 new National science scheme

Agriculture Sector

  • PM KUSUM scheme will be expanded to 20 lakh Government will help 20 lakh farmers for setting up solar pumps; Farm market will to be liberalized.
  • Another 15 lakh farmers to be helped to solarise their grid-connected pump sets.
  • Agriculture market needs to be liberalised; govt proposes to handhold farmers.
  • Krishi UDAN scheme for agricultural exports on international and national routes. This will also improve value realization in North East and tribal districts.
  • Comprehensive measures for 100 water-stressed districts being proposed
  • Scheme to enable farmers to set up solar power generation capacity on their fallow/barren lands and to sell it to the grid.
  • Supporting states to focus on one product for one district so as to make way for Horticulture to gain momentum.
  • Change in incentive scheme for chemical We will encourage balanced use of all fertilizers, a necessary step to change the incentive regime which encourages excessive use of chemical fertilizer 
  • Railways will set up Kisan Rail through PPP arrangement, for transportation of perishable goods.
  • For better marketing and export, supporting states will focus on one product for one district, so that high focus is given at district level for horticulture to gain momentum
  • Zero Budget farming focus of the government.
  • MGNREGS to be used to develop fodder farm.
  • Jaivik Kheti Portal – online national organic products market to be strengthened.

Village Storage Scheme

  • To be run by the SHGs to provide farmers a good holding capacity and reduce their logistics cost.
  • Women, SHGs to regain their position as Dhaanya
  • NABARD to map and geo-tag agri-warehouses, cold storages, reefer van facilities,
  • Warehousing in line with Warehouse Development and Regulatory Authority (WDRA) norms:
  • Viability Gap Funding for setting up such efficient warehouses at the block/taluk
  • Food Corporation of India (FCI) and Central Warehousing Corporation (CWC) to undertake such warehouse building on their land also.
  • Financing on Negotiable Warehousing Receipts (e-NWR) to be integrated with
  • e-NAM (Electronic National Agriculture Market).
  • State governments who undertake implementation of model laws (issued by the Central government) to be encouraged.

 

Fisheries Sector

  • Fish production to be raised to 200 lakh tonnes by 2022-23.
  • Youth and fishery extension work to be enabled by rural youth as Sagar Mitras, forming 500 fish farmer producing
  • Framework for development, management and conservation of marine fishery resources to be put in place

Wellness, Water and Sanitation

  • holistic vision of healthcare that translates into wellness of the citizen
  • A very focused safe water (Jal Jeevan Mission) and comprehensive sanitation program (Swachch Bharat Mission) have been launched to support the health vision. That would reduce the disease burden on the
  • “TB Harega Desh Jeetega” campaign has been
  • Jan Aushadhi Kendra Scheme to all districts offering 2000 medicines and 300 surgicals by
  • Rs 69,000 crore allocated to healthcare sector, 6400 crore (out of Rs. 69,000 crore) for PM Jan Arogya Yojana (PMJAY):
  • Indradhanush immunization plan expanded to cover 12 new diseases
  • Viability gap funding window to be set up to cover hospitals, with priority given to aspirational districts that don’t have hospitals empanelled under Ayushman
  • Propose Rs 35,600 crore nutrition-related
  • Over 6 lakh anganwadi workers have been equipped with smartphones to upload the nutrition status of 10 crore
  • Nominal health cess on import of medical equipment to be introduced to encourage domestic industry and generate resources for health
  • Total allocation for Swachh Bharat Mission is about `12,300 crore in 2020-21
  • welfare of Scheduled Castes and Other Backward classes, propose a budget provision of about 85,000 crore for 2020-21
  • Large solar power capacity to be set up alongside rail tracks, on land owned by Railways
  • More Tejas-like trains for
  • 150 new train to be introduced on PPP basis; Four stations will be also be redeveloped with the help of
  • High speed train between Mumbai to Ahmedabad.
  • Rs 18,600 crore worth Bengaluru suburban transport project launched; 20% equity will be provided by the Centre.

FISCAL numbers & Allocations

  • FY20 fiscal deficit revised to 8% from 3.3% in the current fiscal. For FY21, fiscal target seen at 3.5%.
  • Deviation consistent with Section 4(3) of FRBM
  • Net market borrowing for FY20 at Rs 99 lakh crore; For FY21 it’s pegged at Rs 5.36 lakh crore.
  • Nominal GDP growth for 2020-21 estimated at 10%.
  • Receipts for 2020-21 estimated at Rs 46 lakh crore. Expenditure at Rs 30.42 lakh crore.
  • Defence gets Rs 37 lakh cr ore as the defence budget
  • Rs 83 lakh crore to be allocated for the 16 Action Points;
  • Rs 6 lakh crore allocated to agriculture.
  • Rs 4,400 crore for clean air; Rs 53,700 crore for ST schemes; Rs 85,000 crore for SC, OBCs schemes; Rs 28,600 for women specific schemes; Rs 9,500 crore for senior citizen
  • Rs 30,757 crore rupees for Union Territory of J&K; Rs 5,958 crore rupees for Union Territory Ladakh.

 

Jobs Sector

  • National recruitment agency: New common entrance test for non-gazetted government jobs and public sector
  • Special bridge courses to be designed by the Ministries of Health, and Skill Development: To fulfill the demand for teachers, nurses, para-medical staff and care-givers
  • Urban local bodies to provide internships for young engineers for a period of up to one year.

Investment Sector

  • Govt plans to sell part of its holding in Life Insurance Corporation (LIC) by way of Initial Public Offering.
  • Certain specified categories of government securities will be open fully for NRIs, apart from being open to domestic investors
  • FPI limit in corporate bonds raised to 15% from 9%.
  • Government doubles divestment target for the next fiscal at Rs 1 lakh crore.
  • Expand Exchange Traded Fund by floating a Debt ETF, consisting primarily of govt. securities.

Startups & MSME Sector

  • Tax burden on employees due to tax on ESOPs to be deferred by five years or till they leave the company or when they sell, whichever is
  • New Simplified return for GST from April 2020
  • Start-ups with turnover up to Rs. 100 crore to enjoy 100% deduction for 3 consecutive assessment years out of 10
  • Turnover threshold for audit of MSMEs to be increased from Rs 1 crore to Rs 5 crore, to those businesses which carry out less than 5% of their business in cash
  • App-based invoice financing loans product to be launched, to obviate problem of delayed payments and cash flow mismatches for
  • Amendments to be made to enable NBFCs to extend invoice financing to MSMEs
  • Large solar power capacity to be set up alongside rail tracks, on land owned by Railways
  • More Tejas-like trains for
  • 150 new train to be introduced on PPP basis; Four stations will be also be redeveloped with the help of
  • High speed train between Mumbai to Ahmedabad.
  • Rs 18,600 crore worth Bengaluru suburban transport project launched; 20% equity will be provided by the Centre.

Vivad se Vishwas Scheme

Finance Minister with the announcement of the Finance Bill 2020 has introduced Vivad Se vishwas Bill, 2020 to provide a complete onetime dispute settlement for all the pending appeals. All the appeal, adjudication, or proceedings shall end in respect of the any proceedings in appeal if any taxpayer opt for such scheme. Other key features are produced herein under for your kind reference:

What  is  Direct  Tax Vivad se Vishwas Bill, 2020 [the Scheme] ?

It is a scheme to provide for resolution to the dispute between the taxpayer and the tax authority for the matters pending in appeal.

Who can opt?

Any taxpayer whose appeal is pending before the following appellate authorities as on 31/01/2020 can opt for the settlement in the scheme:

  • CIT – Appeal
  • Income Tax Appellate Tribunal (ITAT)
  • High Court
  • Supreme Court of India

When can scheme can’t be availed

AY in respect of which an assessment has been made u/s 153A or 153C of the Income-tax Act, if it relates to any tax arrear AY in respect of which prosecution has been instituted on or before the date of filing of declaration;

Any undisclosed income from a source located outside India or undisclosed asset located outside India;

An assessment or reassessment made on the basis of information received under an agreement referred to in section 90 or section 90A of the Income-tax Act, if it relates to any tax arrear; 

Appeal before the CIT (Appeals) in respect of which notice of enhancement under section 251 of the Income-tax Act has been issued on or before 31/03/2020

When can scheme can’t be availed

In case of appeal involving disputed tax liability

  • The designated authority shall not institute any proceeding in respect of
  • an offence; or
  • impose or levy any penalty; or
  • charge any interest under the Income-tax Act in respect of tax arrears.

What to pay to claim the relief under this scheme and payment Schedule

Appeals involving disputed tax liability

  • Payment upto 31/03/2020 – Entire disputed Tax
  • Beyond March 2020 – Entire disputed tax plus 10% of the disputed tax

Appeals related to disputed penalty, disputed interest or disputed fee

  • Payment upto 31/03/2020 – 25% of disputed penalty/interest/ fees
  • Beyond March 2020 – 30% of disputed penalty/interest/ fees