Arjuna: Krishna, the Union Budget for 2020-21 was announced on 1st of February 2020. Various new googly provisions were proposed in the same, kindly please explain which were those?
Krishna: Arjuna, In the Union Budget 2020-21, there are certain provisions proposed, those may take the taxpayer's wicket. While playing a 20-20 cricket match, the players have to play carefully till the 20th over, in the same way the taxpayer has to be careful while dealing with the new provisions. If the taxpayer does not perform well in this game, he shall be knocked out in super over, i.e. Faceless assessment & appeal.
Arjuna: Krishna, what are the new proposed googly provisions for Personal Income tax rates in the Budget 2020?
Krishna: The proposed provisions regarding new Income tax rates are as follows:
On satisfaction of certain conditions, an individual or HUF shall, from assessment year 2021-22 onwards, have the option to pay tax in respect of the total income at following rates:
Total Income (Rs) Rate
Upto 2,50,000 -- Nil
From 2,50,001 to 5,00,000 -- 5 percent.
From 5,00,001 to 7,50,000 -- 10 percent.
From 7,50,001 to 10,00,000 -- 15 percent.
From 10,00,001 to 12,50,000 -- 20 percent.
From 12,50,001 to 15,00,000 -- 25 percent.
Above 15,00,000 -- 30 percent.
But no deduction shall be allowed for LIC, House Rent, PF, etc. So, it is least beneficial for the taxpayers.
Similarly, AMT shall not apply to such individual.
New Scheme is optional. One can claim exemption and continue with existing scheme. But, if once a businessman having PGBP income has opted for the new scheme, he won't be allowed to switch to the existing scheme.
Loss under the head income from house property for rented house shall not be allowed to for set off under any other head and would be allowed to be carried forward as per extant law.
Arjuna: Krishna, what are the googly provisions and changes regarding Tax audits and Individual returns in the Budget 2020?
Krishna: Arjuna, the major proposed change in the budget of 2020-21 is about the Individual tax rates and tax audits :
Now multiple limits shall be set for Individual Tax audits, as Rs. 1 Cr., 5 Cr. or 2 Cr. Such complicated limits shall now be applicable. Tax audit shall also be applicable to those not declaring 6% & 8% income for Turnover of Rs. 2 Cr.
It is proposed to increase the threshold limit for a person carrying on business from one crore rupees to five crore rupees in cases where :
- aggregate of all receipts in cash during the previous year does not exceed five per cent of such receipt; and
- aggregate of all payments in cash during the previous year does not exceed five per cent of such payment.
Further, the due date for filing return of income under sub-section (1) of section 139 is proposed to be amended by providing 31st October of the assessment year (as against 30th September) as the due date for an assessee.
For professionals such as Doctors, Chartered Accountants, Architects etc., the limit for Tax audit is Rs. 50 Lakhs only.
Arjuna: Krishna, what are the proposed googly provisions regarding TCS & TDS in the budget 2020-21?
Krishna: Arjuna, the new proposed provisions relating to TDS & TCS are:
It is proposed to amend section 206C for levy of TCS by supplier of goods having turnover greater than 10 crores, to collect TCS @ 0.1% for sale consideration received from a buyer exceeding of Rs. 50 lakhs.
Now, TDS shall be deducted on interest payable by Co-operative societies to its members at 10% if the amount of interest exceeds Rs. 40,000. Also for senior citizen, the limit of interest is Rs. 50,000.
It is also proposed to insert a new section 194-O in the Income Tax Act. As per this section, the E-Commerce operator (ex. Flipkart, Amazon etc.) is required to deduct tax at the rate 1%. But if the gross amount of sales to an individual/HUF exceeds Rs. 5 lakh, then TDS shall not be deducted on the same.
In Form 26AS, alongwith TDS/TCS details now additional information shall be reflected such as; details of shares trading, sale or purchase of immovable property etc. Also, the same information can be used by the assessee while filing his return as prefilled data.
Arjuna: Krishna, what are the other major googly balls in Budget of 2020 which can out the taxpayers?
Krishna: Arjuna, apart from the above, there are some other points also, on which the taxpayer needs to pay careful attention to. Those are:
If Individual and company does not claim deductions, then they will be eligible to opt for taxation under New Scheme. But, in case of Partnership firms and LLP does not have this option, they'll have to continue with the existing 30% tax rate.
A co-operative society resident in India shall have the option to pay tax at 22 percent alongwith surcharge.
Due to removal of Dividend Distribution Tax, Individuals may have to pay extra tax.
A new scheme similar to the ‘'Sabka Sath, Sabka Vishwas'' as in Indirect taxes, has been proposed for Direct taxes too, named as ‘'Vivad se Vishwas'' in which the taxpayer can pay 100% of the disputed amount, and the amount of interest & penalty shall be waived.
Similar to online assessments, now appeals shall also be filed online itself. Details for the same shall be made available soon.
A new proviso shall be introduced in the Income Tax Act that if the assesse has deposited 20% of the tax, interest, fee, penalty or any other sum payable under the Income tax act, the Income Tax Appelate Tribunal shall grant a stay.
To eradicate the use of Fake invoices, a new provision has been proposed by the Income Tax department for levy of penalty on a person if it is found that in the books of accounts maintained by him, there is a false entry, or any forged invoice is recorded in the books. The amount of penalty shall be equal to the amount of false entries.
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.
If the contribution of employer in Provident fund, Superannuation fund, National Pension Scheme etc. exceeds Rs. 7,50,000 then the same shall be taxable in the hands of employee.
Arjuna: Krishna, what does the taxpayer learn from this?
Krishna: Arjuna, the new provisions can put the taxpayer into trouble if not dealt with properly. So one should pay careful attention towards the googly balls and do the batting wisely. As even if he hits the ball, it can get caught in the hands of faceless appeals and scrutinies.
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