Live Updates and discussion on Union Budget 2020

I have no regular payments to LIC, house loan , NPS , medical claims etc.

This year Fy2019-20  I made SCSS- FD (5 years) for the 1st time & will be availing 1.5 lakhs under 80c + 50k under 80TTB. (hopefully net income till Mar31st 2020 (after 2 lakh deduction) will go below 5 lakhs to be eligible for 87A discount)

Next year on a income of Rs 7.5 lakh , I will file under the new scheme ---I wont avail any 80c or any other discount (other than 80TTB 50k for seniors if eleigible ) & will pay 10% on income between 5-7.5 lakh. No need to make any fresh investment blocking money .

For peopel with existing home loan, kid tution, parents medical bills, medical insurance, LIC /NPS yearly payments committed - old scheme is far better.Over all this budget is a eye wash but administration/compliance easier from FY2020-21.

New Income tax rate for individuals and HUFs

• A new section 115BAC is inserted in the Income Tax Act by Finance Bill 2020 which provides following
• On satisfaction of certain conditions, an individual or HUF shall, from P.Y. 2020-21, A.Y. 2021-22 onwards, have the option to pay tax in respect of the total income at following rates:

• To offer total income at above tax rates, this section is optional for individual and HUF.
• In other words, an individual or HUF may either opt for existing income tax slab rate applicable to them or go for new income tax slab rates as mentioned above.
• Existing income tax slab rate for individual and HUF

• But for offering total income to new income tax rates, individual and HUF has to fulfill a condition
• The condition for concessional rate shall be that the total income of the individual or HUF is computed

• Without allowing exemption of

1. Leave travel concession u/s 10(5)
2. House rent allowance u/s 10(13A)
3. Some of the allowances u/s 10(14)
4. Allowances to MPs/MLAs u/s 10(17)
5. Allowance for income of minor u/s 10(32)
6. Section 10AA available to SEZ unit

• Without allowing deduction of

1. Standard deduction, entertainment allowance and employment/professional tax u/s 16
2. Interest on loan taken for purchase/construction/renewal/reconstruction of self-occupied property and vacant property u/s 24(b)
3. Additional depreciation u/s 32(1)(iia)
4. Investment allowance @ 15% of actual cost of plant and machinery in respect of manufacturing units set up in notified areas of West Bengal, Bihar, Andhra Pradesh and Telangana
5. Deposit made to Tea Development Account/Coffee Development Account/Rubber Development Account u/s 33AB
6. Deposit made to Site Restoration Fund Account u/s 33ABA
7. Contribution made to approved institution/college/university for scientific research u/s 35(1)(ii)
8. Contribution made to approved institution/college/university for social and statistical research u/s 35(1)(iii)
1. Contribution made to approved Indian Company engaged in research and development for scientific research u/s 35(1)(iia)
10. Contribution to IIT and National Laboratory for scientific research u/s 35(2AA)
11. Capital expenditure in respect of specified business u/s 35AD
50. Expenditure incurred on notified skill development expenditure u/s 35CCC
1000. Family pension u/s 57(iia)

• Without claiming deduction under chapter VIA (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 claimed
• without set off of any loss –

1. carried forward or depreciation from any earlier assessment year, if such loss or depreciation is attributable to any of the deductions referred above
2. under the head house property with any other head of income (This means loss under the head house property can be set off against income under the head house property but cannot be set off against income under other head in order to avail income tax rates u/s 115BAC)

• without any exemption or deduction for allowances or perquisite, by whatever name called, provided under any other law for the time being in force
• However exemption in respect of following allowances notified under section 10(14) of the Act shall be allowed to the Individual or HUF exercising option under the proposed section 115BAC:

1. Transport Allowance granted to a handicapped employee to meet expenditure for the purpose of commuting between place of residence and place of duty
2. Conveyance Allowance granted to meet the expenditure on conveyance in performance of duties of an office
3. Any Allowance granted to meet the cost of travel on tour or on transfer
4. Daily Allowance to meet the ordinary daily charges incurred by an employee on account of absence from his normal place of duty

1. Abolition of dividend distribution tax and exemption in respect of dividend u/s 10(34)

• The domestic company is not required to pay dividend distribution tax in respect of dividend declared/distributed/paid on or after 01^st April 2020
• Consequently such dividend will be included in total income of shareholder receiving it and the shareholder will be liable to pay income tax on such dividend at the rates applicable to them
• Exemption u/s 10(34) in respect of dividend received from domestic company shall not be available to shareholders from P.Y. 2020-21

In respect of dividend received from domestic company on or after 01/04/2020, shareholders have to pay income tax on it even if such dividend is less than Rs.10 lakh as was provided u/s 115BBDA

Government has given alternate scheme so that people in lower income bracket are not forced to block money in 80C investments. We have to understand that Insurance should not be taken with the intention to save tax rather it protects the risk.

Abolition of DDT is also a very good step since dividend was getting taxed 3 times earlier.

It is not clear that the Finance Budget 2020,  for the Individual Tax Payers introduce a new Section 115 BAC where an employee who has no other business income, they can Opt-in as Old or New Tax Regime. And who Opt-in a New Tax Regime, he can not get any benefits of Income Tax Section or Exemption from Income Tax but who Opt-in the Old Tax regime, they can get the full benefits as like as the previous financial year 2019-20. Here is my question that the as per the New Tax Regime the Exemption of NPS and Section 80CCD(1B) is entitled or not?