Direct Tax proposals in the Finance Bill 2020

Direct Tax proposals in the Finance Bill 2020

FINANCE BILL, 2020

PROVISIONS RELATING TO DIRECT TAXES

Introduction

The provisions of Finance Bill, 2020 (hereafter referred to as “the Bill”), relating to direct taxes seek to amend the Income-tax Act, 1961 (hereafter referred to as ‘the Act’), Prohibition of Benami Property Transactions Act, 1988 (hereafter referred to as “PBPT Act”), and Finance Act, 2013, to continue to provide momentum to the buoyancy in direct taxes through tax-incentives, reducing tax rates for co-operative society, individual and Hindu undivided family (HUF), deepening and widening of the tax base, removing difficulties faced by taxpayers, curbing tax abuse and enhancing the effectiveness, transparency and accountability of the tax administration.

With a view to achieving the above, the various proposals for amendments are organised under the following heads:-

(A) Rates of income-tax;
(B) Tax incentives;
(C) Removing difficulties faced by taxpayers;
(D) Measures to provide tax certainty;
(E) Widening and deepening of tax base;
(F) Revenue mobilisation measures;
(G) Improving effectiveness of tax administration;
(H) Preventing tax abuse; and
(I) Rationalisation of provisions of the Act.

DIRECT TAXES
A. RATES OF INCOME-TAX

I. Rates of income-tax in respect of income liable to tax for the assessment year 2020-21.

In respect of income of all categories of assessees liable to tax for the assessment year 2020-21, the rates of income-tax have either been specified in specific sections (like section 115BAA or section 115BAB for domestic companies) or have been specified in Part I of the First Schedule to the Bill. These are the same as those laid down in Part III of the First Schedule to the Finance (No 2) Act, 2019, as amended by Taxation Law Amendment Act, 2019 (TLAA) for the purposes of computation of “advance tax”, deduction of tax at source from “Salaries” and charging of tax payable in certain cases.

(1) Surcharge on income-tax

The amount of income-tax shall be increased by a surcharge for the purposes of the Union,—

(a) in the case of every individual or HUF or association of persons or body of individuals, whether incorporated or not, or every artificial juridical person referred to in sub-clause (vii) of clause (31) of section 2 of the Act, not having any income under section 115AD of the Act,—

(i) having a total income (including the income under the provisions of section 111A and 112A of the Act)
exceeding fifty lakh rupees but not exceeding one crore rupees, at the rate of ten per cent. of such incometax; and

(ii) having a total income (including the income under the provisions of section 111A and 112A of the Act)
exceeding one crore rupees but not exceeding two crore rupees, at the rate of fifteen per cent. of such
income-tax;

(iii) having a total income (excluding the income under the provisions of section 111A and 112A of the Act)
exceeding two crore rupees but not exceeding five crore rupees, at the rate of twenty-five per cent. of such
income-tax;

(iv) having a total income (excluding the income under the provisions of section 111A and 112A of the Act)
exceeding five crore rupees, at the rate of thirty-seven per cent. of such income-tax;

(v) having a total income (including the income under the provisions of section 111A and 112A of the Act)
exceeding two crore rupees, but is not covered under clause (iii) or (iv) above, at the rate of fifteen per cent
of such income tax:

Provided that in case where the total income includes any income chargeable under section 111A and 112A of the Act, the rate of surcharge on the amount of income-tax computed in respect of that part of income shall not exceed fifteen per cent;

(aa) in the case of individual or every association of person or body of individuals, whether incorporated or not, or every artificial juridical person referred to in sub-clause (vii) of clause (31) of section 2 of the Income-tax Act having income under section 115AD of the Act,-

(i) having a total income exceeding fifty lakh rupees but not exceeding one crore rupees, at the rate of ten per
cent. of such income-tax; and

(ii) having a total income exceeding one crore rupees but not exceeding two crore rupees, at the rate of fifteen
per cent. of such income-tax;

(iii) having a total income [excluding the income of the nature referred to in clause (b) of sub-section (1) of section 115AD of the Act] exceeding two crore rupees but not exceeding five crore rupees, at the rate of twenty-five per cent. of such income-tax;

(iv) having a total income [excluding the income of the nature referred to in clause (b) of sub-section (1) of section 115AD of the Act] exceeding five crore rupees, at the rate of thirty-seven per cent. of such income-tax;

(v) having a total income [including the income of the nature referred to in clause (b) of sub-section (1) of section 115AD of the Act] exceeding two crore rupees but is not covered in sub-clauses (iii) and (iv), at the rate of fifteen per cent. of such income-tax:

Provided that in case where the total income includes any income chargeable under clause (b) of sub-section (1) of section 115AD of the Act, the rate of surcharge on the income-tax calculated on that part of income shall not exceed fifteen per cent;

(b) in the case of every co-operative society or firm or local authority, at the rate of twelve per cent. of such income-tax, where the total income exceeds one crore rupees;

(c) in the case of every domestic company except such domestic company whose income is chargeable to tax under section 115BAA or section 115BAB of the Act,-

(i) at the rate of seven per cent. of such income-tax, where the total income exceeds one crore rupees but does
not exceed ten crore rupees;

(ii) at the rate of twelve per cent. of such income-tax, where the total income exceeds ten crore rupees;
(d) in the case of domestic company whose income is chargeable to tax under section 115BAA or 115BAB of the Act, at the rate of ten per cent;

(e) in the case of every company, other than a domestic company,-

(i) at the rate of two per cent. of such income-tax, where the total income exceeds one crore rupees but does
not exceed ten crore rupees;

(ii) at the rate of five per cent. of such income-tax, where the total income exceeds ten crore rupees;

(f) In other cases (including sections 92CE, 115-O, 115QA, 115R, 115TA or 115TD), the surcharge shall be levied at the rate of twelve per cent.

To read more in details, find the enclosed file

File: 40_17990_memorandum_2020

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