Important Income Tax (Direct Tax) Amendments (since 2019)

The government has announced several measures to promote growth, investment and create new employment opportunities through the amendments in the Income-tax Act, 1961, and the Finance Act (No. 2), 2019.

The following measures have been measures taken by the Ministry of Finance:

• Reduction in the corporate tax rate from 30% to 22% provided the company did not avail of any exemption or incentive.

• An option to pay income-tax at the rate of 15% for the new domestic companies incorporated on or after 1st October 2019 and making a fresh investment, subject to their not availing any exemption or incentives and provided they commence production by 31st March 2023.

• Reduction in the Minimum Alternate Tax from the existing rate 18.5% to 15% for existing companies that are availing the exemption/incentives.

• To stabilize the flow of funds into the capital market it was decided that the enhanced surcharge introduced by the Finance (No.2) Act, 2019 shall not apply to on capital gains arising on sale of equity share in a company or a unit of an equity oriented fund or a unit of a business trust liable for securities transaction tax, in the hands of an individual, Hindu Undivided Family (HUF), Associations of Persons (AOP), Body of Individuals (BOI) and Artificial Judicial Person (AJP).

• The enhanced surcharge shall also not apply to capital gains arising on sale of any security including derivatives, in the hands of Foreign Portfolio Investors (FPIs).

• In order to provide relief to listed companies which had already made a public announcement of buy-back before 5th July 2019, it was provided that tax on buy-back of shares in case of such companies shall not be charged.

• The amendments expanded the scope of Corporate Social Responsibility (CSR) of 2 per cent spending. The CSR 2% fund can be spent on incubators funded by Central or State Government or any agency or Public Sector Undertaking and making contributions to public-funded Universities, IITs, National Laboratories, and Autonomous Bodies engaged in conducting research in science, technology, engineering and medicine aimed at promoting Sustainable Development Goals.

• Rationalisation of tax rates,

• Simplification of income tax return forms,

• Faster processing of refunds,

• Speedy resolution of grievances and

• Introduction of faceless processes to ease the compliance burden on taxpayers

• Government has launched ‘Transparent Taxation-Honouring the Honest.

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