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Personal Taxation

1. There are no changes in the slab rate that have been proposed in this Budget

2. To tax a resident individual (who was earlier a non-resident), who has a retirement benefit account in a notified country, in India in the manner and year as may be prescribed, subject to conditions.

3. To not grant tax exemption on maturity with respect to ULIPs issued on or after 1 February 2021, if the premium payable for any previous year exceeds INR 250,000, and treat them as capital assets from FY20-21, subject to conditions.

4. To tax the interest accrued on employee contributions to provident fund/other provident funds exceeding INR 250,000 in a year, subject to conditions

5. To exempt resident senior citizens over 75 years from tax return filing requirement, subject to conditions

6. dditional interest deduction of INR 150,000 u/s 80EEE, available to first time residential home buyers, to be extended until March 31, 2022.

7. Tax to be withheld at source at rates in force by a specified bank on pension income and interest income of specified senior citizens, after giving effect to chapter VI-A and rebates.

8. Pre-filled return form already in place will now cover expanded details such as capital gain, dividend income and interest from bank/ post office.

9. Exemption for LTC cash scheme

a. Exempted the cash allowance in lieu of LTC, subject to conditions (to be prescribed in the Rules) - see the key ones below:

i. The employee exercises option for deemed LTC fare in lieu of applicable LTC for the 2018-2021 block

ii. Expenditure to be incurred from 12 October 2020 to 31 March 2021 on goods or services liable to GST at 12 percent or above

iii. mount of exemption shall not exceed lower of: (i) INR 36,000 per person; or one- third of above expenditure

iv. Payment is through banking channels

v. The amendment is proposed to be for FY20-21 only

India Budget 2021 - A Usable Template

Corporate Taxation

1. Corporate tax rate remains unchanged

2. To facilitate strategic disinvestment of public sector companies, it is proposed to amend the law to enable M&A transactions of such companies

3. To amend the law to provide for tax neutral conversion of urban cooperative bank into a banking company

4. To expand the safe harbour from 10 percent to 20 percent in case of transfer of a residential unit during 12 November 2020 to 30 June 2021 by way of first-time allotment to any person for consideration not exceeding INR 2 crores

5. To provide that with effect from 1 April 2020, no TDS on payment of dividends shall apply to income credited or paid by an SPV to a business trust (i.e., InVIT/REIT)

6. To grant tax treaty benefits with effect from 1 April 2021 at the time of withholding tax on income with respect to securities of FPIs, subject to furnishing of tax residency certificate


7. To replace AAR by one or more BFAR from a date to be notified:

− Advance rulings shall not be binding on the applicant or the tax department, and either party can file an appeal to High Court Pending AAR cases will be transferred to BFAR

− Enabling provision for faceless functioning of BFAR

8. To define the term 'liable to tax'; accordingly, where there is a liability of tax on a person under any law of any country, such person is treated as 'liable to tax' even if an exemption has been provided from such tax liability

9. Equalisation levy on e-commerce operators

a. If consideration for e-commerce supply of goods or services are taxable as 'royalty' or 'fee for technical services', the same would be excluded from the purview of equalisation levy

b. ny leg of a transaction, such as placing or acceptance of orders/offers, making online payment for supply of goods/provision of services, shall trigger the levy

c. Consideration received shall be subjected to equalisation levy on the gross amount irrespective of whether the e-commerce operator owns the goods or provides/facilitates e-commerce services

d. Exemption from income tax is now aligned with the date of introduction of equalisation levy, i.e., 1 April 2020

10. Minimum Alternate Tax (MAT)

a. It is proposed to adjust the earlier years' book profits for the purpose of MAT computation for secondary adjustment(s) or advance pricing agreement (APA) by making an application to the tax officer, who must dispose it off within four years from the end of the year in which the application is received

b. Expenses and income related to dividend earned by foreign company are required to be adjusted from the book profits where income is taxed at a rate lower thanMAT as per double taxation avoidance agreement


11. Professional LLPs excluded from presumptive taxation

a. s per section 44ADA of the IT Act, subject to certain conditions, profits of the professionals are presumed at 50% of the gross receipts or the income offered, whichever is higher.

b. The professionals opting for this scheme are neither required to maintain books of accounts under section 44AA of the IT Act nor get their accounts audited under section 44AB of the IT Act.

c. s LLPs are required to maintain books of accounts under the LLP Act, there was an ambiguity on applicability of section 44ADA of the IT Act to LLPs.

d. In order to make the position clear, the Finance Bill proposes to amend section 44ADA(1) of the IT Act to specifically provide that section 44ADA of the IT Act shall be applicable to an individual, HUF or partnership firm and not to an LLP as defined under section 2(1)(n) of LLP Act.

e. This amendment shall be made effective from fiscal year 2020-21.

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