UNION BUDGET 2020 HIGHLIGHTS – DIRECT TAXATION

Budget 2020 highlights pertaining to direct taxation:

1.  Personal income tax – Change in tax slabs applicable to both individual and HUFs (Section 115 BAC)

Upto Rs. 2,50,000 – NIL

From 2,50,001 to Rs. 5,00,000 – 5 %

From 5,00,001 to Rs. 7,50,000 – 10 %

From 7,50,001 to Rs. 10,00,000 – 15 %

From 10,00,001 to Rs. 12,50,000 – 20 %

From 12,50,001 to Rs. 15,00,000 – 25 %

Above Rs. 15,00,000                     – 30 %

2. Dividend distribution tax to be removed and dividend to be taxed in the hands of the recipient. 

3. Income tax audit – Limits increased to 5 crores of total sales, turnover or gross receipts. Condition – 

a. Aggregate of all amount received including amount received for sales, turnover or gross receipts, received in cash, does not exceed 5% of the turnover and 

b. Aggregate of all payments made including amount incurred for expenditure in cash does not exceed 5% of the said payments.

4. Start-ups – 

 i. Taxation of Employee Stock Option Purchase (ESOPs) – Tax payment on ESOPs deferred by five years or till the employee leaves the company or when he/she sells the shares, whichever is earliest.

ii. Tax holiday – Deduction of an amount equal to 100% of the profits and gains derived from an eligible business by an eligible start-up for 3 consecutive assessment years (AYs) out of 10 AYs.

5. Charitable donations – Donee’s (example – NGOs) information to be pre-filled in taxpayer’s return on the basis of information of donations furnished by the donee. 

6. Facesless Appeals – To eliminate human interference, faceless appeals to be introduced on the lines of faceless assessment. 

7. Taxpayers Charter  – Section 119A. The Board shall adopt and declare a Taxpayer’s Charter and issue such orders, instructions, directions or guidelines to other income-tax authorities as it may deem fit for the administration of such Charter

8.  ‘Vivad Se Vishwas’Scheme on the lines of ‘Sabka Vishwas Dispute Resolution Scheme’ introduced to settle disputes of service tax and excise. 

9. Instant PAN through Aadhaar – PAN shall be instantly allotted online on the basis of Aadhaar without any requirement for filling up of detailed application form