1. Simplified tax regime for Individual Taxpayers

  • New Income Tax Slab Rates have been proposed for Individuals :

Taxable Income

New Tax Rates
INR 0 – INR 2.5 lacs NIL
INR 2.50 lacs – INR 5.00 lacs 5%
INR 5.00 lacs – INR 7.50 lacs 10%
INR 7.50 lacs – INR 10.00 lacs 15%
INR 10.00 lacs – INR 12.50 lacs 20%
INR 12.50 lacs – INR 15.00 lacs 25%
Above INR 15.00 lacs 30%

The taxpayer at its discretion can opt to pay taxes under the new regime or old regime. However, it is pertinent to note that once the taxpayer chooses to pay taxes as per the new slab rate for any previous year, the same cannot be revoked in any  subsequent year.

  • Currently, there are more than 100 exemptions available to the taxpayer. It is proposed to remove around 70 of these. The other remaining exemptions to be reviewed and rationalized in the coming years.
  • Taxpayers opting to pay taxes under the new tax regime would have pre-filled income tax returns

2. Corporate Income Tax

  • The rate of income tax for domestic companies whose turnover in FY 2018 – 2019 does not exceed INR 400 crore will be 25% and in all other cases the rate of income tax shall be 30% of the total income.
  • The concessional rate of income tax of 15% which was originally extended only to manufacturing domestic companies set up on or after 1st October 2019 and which commence manufacturing or production by 31st March 2023 has now been extended even to domestic companies engaged in business of generating electricity.

3.Dividend Distribution Tax (DDT)

  • Companies and Mutual Funds will not be liable to pay Dividend Distribution Tax on dividend declared after 31st March 2020. The dividend so received shall be taxable in the hands of the taxpayers at the applicable tax rates.

4. Affordable Housing

  • In order to incentivize building affordable housing to boost the supply of such houses, the period of approval of the project by the competent authority is proposed to be extended to 31st March 2021.
  • In order to avail the deduction of INR 1,50,000/- under s. 80EEA to promote affordable housing, the period of approval of the project by the competent authority is proposed to be extended to 31st March 2021.

5. Start – Ups

  • In order to support larger startup’s, it is proposed to extend the turnover limit from existing INR 25crores to INR 100 crores to get 100% of it’s profits deduction from existing 7 years to 10 years.
  • In order to ease the tax burden in respect of ESOP’s of startup, it is proposed to differ the payment of perquisite tax from 14 days to the earliest of the following :- Expiry of 48 months from the end of the AY in which the option is exercised,
    - The date of sale of share / security by the employee,
    - The date when he ceases to be the employee

Tax shall be payable in the year at the applicable rates in which the option is exercised.

6. Form 26AS

  • Form 26AS shall also provide information such as purchase of shares / sale of shares / immovable properties to enable taxpayers to use such information for filing of Return of Income and to calculate such tax liability.

7. Rationalizing the provisions to compute cost of acquisition

  • Under the exsiting law, the cost of acquisition of land or building or both acquired o ore before 1st April 2001 shall be higher of FMV as on 1st April 2001 or actual cost of acquisition. Under the proposed law, the cost of acquisition shall not exceed Stamp Duty Value as on 1st April 2001

8.Vivad se Vishwas scheme

In order to reduce the pending litigations, it is proposed to introduce an amnesty scheme. Under this scheme :

  • Taxpayer has to pay the disputed taxes before 31st March 2020;
  • In the event of availing this scheme, the taxpayer will get an immunity from interest, penalty and prosecution;
  • In case the taxpayer fails to make the payment before 31st March 2020, the same can be availed of by 30th June 2020 by making payment of additional fees;
  • Taxpayer can avail this scheme when appeal is pending under any level.

9.Rationalizing provisions relating to Tax Audit under s. 44AB

In order to reduce the compliance burden on small and medium enterpises, it is proposed to increase the thresh hold limit of INR 1 crore to INR 5 crores in case where :

  • Receipts in cash doesn’t exceed 5% of the aggregate receipts in the previous year and
  • Payments in cash doesn’t exceed 5% of the aggregate payments in cash in the previous year.

10. Improving Tax Administration

  • It is proposed to extend the scope of e-assessment to s. 144 of the Income Tax Act 1961 (i.e best judgment assessment)
  • E-appeal shall be introduced on lines similar to e-assessment
  • Penalty proceedings shall also be made faceless.