PRESUPUESTO DE LA UNIÓN 2020: CAMBIOS CLAVE | LEY DEL IMPUESTO SOBRE LA RENTA

Hon’ble Finance Minister Nirmala Sitharaman presented union budget 2020 - 21 in parliament on 1^st February 2020 around 3 prominent themes –

1. Aspirational
   India,
2. Economic
   Development and
3. Caring
   society.

Apart from allocation of funds for different sectors such as education, railway, etc. she proposed various major amendments in Income Tax Act, 1961 and few amendments in Goods and Service tax law.

In this article, we will go through around all major amendments in Income Tax Act, 1961.

AMENDMENTS IN INCOME TAX ACT, 1961 proposes in Budget 2020

Amendments in Income Tax Act, 1961 proposed with objective of stimulate growth, simplified tax structure, easy compliance and minimum litigations. With these objectives, following changes are proposed:

Read Also: Equalisation Levy: Features, Applicability, Penalty

1. Income Tax slabs under Budget 2020

1.1 Change in Income tax slab of Individuals/HUFs under Budget 2020

• No changes
  are proposed in existing income tax slab rates applicable for Individual or
  HUFs, which is as follows:

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* INR 3,00,000 applicable for resident Senior Citizens (Who is more than 60 years but less than 80 years at any time during Financial year)and INR 5,00,000 applicable for super senior citizens (Who is more than 8pyears at any time during Financial year)

• A new slab
  of Income tax rates has been proposed for Individuals or HUFs, which is as
  follows:

‍

‍

1.2  Exemptions Not allowed under New Slab Rates in Budget 2020

A new section 115BAC has been introduced vide Finance Act, 2020,wherein option is provided to Individuals/HUFs to pay tax at new slap rates subject to following conditions:

1. This option is available to Individuals or HUFs only;
2. New slab rates are an option available to individuals/HUFs. They may still opt to pay tax as per existing slab rates.
3. For the purpose of computation of taxable income as per new slabs, following exemptions or deduction will not be available:
   1. Exemption of Leave travel concession given under section 10(5);
   2. Exemption of House rent allowance under section 10(13A);
   3. Exemption of Allowances received by MPs/MLAs under section 10(17);
   4. Exemption on clubbing of income of minors given under section 10(32);
   5. Exemptions to newly established entities in Special Economic Zones under section 10AA;
   6. Standard deduction given of INR 40,000 given under section 16;
   7. Deduction of entertainment allowance given under Section 16;
   8. Deduction of interest on self occupied or vacant property given under section 24;
   9. Deduction of additional depreciation given under section 32(1)(iia);
   10. Deduction under section 32AD for Investment in new plant or machinery in notified backward areas in certain States;
   11. Deduction under section 33AB for Tea development account, coffee development account and rubber development account;
   12. Deduction under section 33ABA Site Restoration Fund.
   13. Deduction for donations or expenditure incurred on scientific research under section 35;
   14. Deduction under section 35AD for expenditure on specified business.
   15. Deduction under section 35CCC for Expenditure on agricultural extension project.
   16. Deductions for family pension under section 57(iia);
   17. Any deduction prescribed under Chapter-VIA except deductions under section 80CCD(2) and 80JJAA (like deduction available under section 80C, 80D etc.)

• While computing
  taxable income under new tax rate slabs, assessee shall not allowed to set-off
  any carried forward losses or depreciation accumulated for any of the above mentioned
  deductions.

• Losses under head
  House property shall not be allowed to set off against income under any other
  head.

• No deduction or exemption shall be available for any allowance or
  perquisites given under any other law.

• If assessee fails
  to comply with any of the above mentioned condition then he shall be assessed
  as per existing Income Tax slab.

• If an Assessee opts
  for this option then he may withdraw from this option only once in any
  subsequent year. However, this option shall not be available to him thereafter.
  If assessee doesn’t have business Income then he may opt for this option.

• Accordingly, before deciding slab for payment of income tax, you need to
  consider following points:
  • Tax payable under
    both options;
  • Complexity or
    authenticity of exemptions or deductions available;
  • Deductions or
    exemptions that may be available in future.

1.3  Change in Income tax slab of  Co-operative Society under Budget 2020

• Similar to Individuals/HUFs, an option is also provided to co-operative
  societies, wide section 115BAD, to pay Income tax at the rate of 22% subject to
  similar conditions provided for Individuals/HUFs above.

• Following is the existing slabs for co-operative societies:

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1.4  Change in Income tax slab of  Companies under Budget 2020

• Companies
  opting to pay tax under section 115BAA (Concessional rate of Tax on income of
  certain domestic companies) and 115BAB (concessional rate of Tax on income of
  new manufacturing domestic companies) were not eligible for deduction under
  chapter V1-A except Section 80JJAA. However, now deduction under 80M has also
  been allowed.

• Business of
  generation of electricity is proposed to be qualify as manufacturing business
  for the purpose of Section 115BAB.

1.4 Change in provisions of determination of Residential status of an individual under Budget 2020

As per existing provisions, if any person resides in India for 60days or more during any year and his aggregate stay is for 365 days or more during immediately preceding 4 years then such person is considered as “Resident” for such year for the purpose of Income Tax Act, 1961.

• However, if any person is a citizen of India or a person of Indian origin and he stays outside India and if he comes to India for visit during any previous year then such 60 days shall be considered as 182 days.
• Consequently, his income shall be liable to Income tax during the year in which he stayed in India for 182 days of more. 
• However, where such person is having total income, other than Income from foreign sources, exceeding 15 lacs during any previous year then for such year period of 182 days are proposed to reduce to 120 days with effect from 01.04.2021 
• So, if you are frequently visiting India then please make note of these provisions as any negligence may trigger your Income tax liability in India.
• A new provision is also provided which specifies that if a citizen of India is staying in any other country and his income is not liable to tax in such other country by the reasons of domicile or residence or any other criteria of similar nature then such person shall be consider as resident of India.
• An individual shall be qualified as “Resident but not ordinarily resident” if he has been non-resident in India for any 7 out of 10 preceding years. (Earlier it was 9 out of 10)

2. Withdrawal of Exempted Income under section 10 in Budget 2020

• Exemption
  given to UPSC Chairman and members and chief election commission and election
  commissioners from taxability of certain allowances has been proposed to
  withdraw.

• Finance Act,
  2020 has proposed to exemption interest or dividend income earned from wholly
  owned subsidiary or Abu Dhabi Investment Authority and Soverign wealth fund.

• Exemption is
  also proposed for income accruing or arising to Strategic Petroleum Reserves
  Limited (ISPRL), being a wholly owned subsidiary of Oil Industry Development
  Board under the Ministry of Petroleum and Natural Gas, as a result of an
  arrangement for replenishment of crude oil stored in its storage facility in
  pursuance to directions of the Central Government in this behalf.

3. Taxability of employer contribution to EPF, Superannuation funds and National Pension Scheme

• At present
  following are the tax implication on contribution made by employer:
  • Contribution
    of recoginised provident fund in excess of 12% of salary is taxable;
  • Any
    contribution to approved superannuation funds in excess of INR 1,50,000 is
    taxable as perquisite;
  • Deduction is
    allowed to assessee to the extent of 14% contribution to National Pension
    Scheme (NPS) and 10% contribution by any other employer.

• However,
  there is no combined upper limit is given. Therefore, a combined upper limit of
  INR 7,50,000 is proposed to imposed. Accordingly, aggregate contribution in
  excess of INR 7,50,000 shall be subject to income tax.

4. Provisions related to Tax Audit under Income Tax Act in Budget 2020

• As per
  existing provisions, a business is required to get his accounts audited under
  section 44AB of Income Tax Act, 1961 where gross receipts exceeds INR 1 Crore
  during a year. Threshold limit of audit is INR 50 Lacs for professionals.

• To ease
  compliance  burden, it has been proposed
  to increase the threshold limit for business up to INR 5 crores subject to
  following conditions:

• los cobros en efectivo durante el año no superan el 5% de los cobros totales durante el año; y

• los pagos en efectivo durante el año no superan el 5% de los pagos totales durante el año

5. Cambios en la fecha límite de presentación de la declaración de la renta en el Presupuesto 2020

Considerando que se debe otorgar tiempo para presentar la declaración de la renta después de presentar el informe de auditoría fiscal, se propone extender la fecha límite de presentación de la declaración de la renta en caso de informe de auditoría fiscal hasta el 31 ^de octubre.

6. Determinación del costo de adquisición en ciertos casos bajo el rubro de ganancias de capital en el Presupuesto 2020

• Según la
  sección 43CA (Transferencia de terrenos o
  edificios que no sean activos de capital), 50C (transferencia de terrenos o edificios como
  activos de capital) o 56(2)(x) (recepción de bienes inmuebles por una persona de
  otra), si el valor del impuesto de timbre del terreno o edificio es mayor que el valor de
  la contraprestación, entonces el valor del impuesto de timbre se considerará como contraprestación de venta
  a efectos de gravar el Impuesto sobre la Renta. Sin embargo, si el valor del impuesto de timbre no
  supera el 105% de la contraprestación real, entonces se tomará la contraprestación real.
  

• Se ha propuesto
  aumentar dicha variación del 5% al 10%.

• Para efectos
  de la indexación del costo de adquisición de terrenos o edificios comprados
  antes del 01.04.2001, el contribuyente tiene la opción de tomar el valor justo de mercado
  al 01.04.2001 o el costo real del activo como costo de adquisición.

• No a través
  de la ley de finanzas de 2020, se propone que el valor justo de mercado al 01.04.2001
  no deba exceder el valor del impuesto de timbre en dicha fecha.

7. Abolición del Impuesto sobre la Distribución de Dividendos en el Presupuesto 2020

• Según las
  disposiciones vigentes, cualquier dividendo distribuido por la empresa está sujeto al
  Impuesto sobre la Distribución de Dividendos (DDT) bajo la sección 115-O a una tasa del 15%. La empresa
  es responsable de pagar dicho impuesto.

• Sin embargo,
  dicho dividendo está exento en manos de los receptores bajo la sección 10.

• Se propone
  limitar las disposiciones de la sección 115-O a los dividendos distribuidos hasta el
  31.03.2020. En consecuencia, cualquier dividendo distribuido después del 01.04.2020 será
  gravable en manos de los receptores, no de la empresa.

• En consecuencia,
  se ha retirado la exención correspondiente en la sección 10.

• Además,
  la sección 57 también ha sido enmendada para proporcionar una deducción del 20% de los ingresos
  por dividendos.

8. TCS sobre remesas extranjeras bajo la sección 206C

• Un agente autorizado que reciba un monto o un agregado de montos de setecientas mil rupias o más en un año financiero para remesas fuera de la India bajo el LRS del RBI, será responsable de recaudar el TCS, si recibe una suma que exceda dicho monto de un comprador que sea una persona que remita dicho monto fuera de la India, a una tasa del 5%. En casos sin PAN/Aadhaar, la tasa será del 10%.

• Un vendedor de un paquete de programa turístico en el extranjero que reciba cualquier monto de cualquier comprador, que sea una persona que compre dicho paquete, será responsable de recaudar el TCS a una tasa del 5%. En casos sin PAN/Aadhaar, la tasa será del 10%.

Las disposiciones anteriores se aplicarán a partir del 1 de abril de 2020.

Para más detalles lea aquí TCS sobre remesas extranjeras a través del Esquema de Remesas Liberalizadas (LRS) y sobre la venta de paquetes turísticos en el extranjero al 5%

9. Changes in provisions of TDS in Budget 2020

• As per
  Section 194J, TDS @ 10% is deductible on payment made for professional service
  or technical service. TDS rate is proposed to reduce to 2% on payment for
  technical services.

• New section
  194K is proposed to introduce to deduct TDS on any payment made to resident for
  income in relation to Units of mutual funds or units from the Administrator of
  the specified undertaking or units from the specified company at the rate of
  10%. However, no TDS is required if amount of such income does not exceeds INR
  5,000.

10. TDS deduction by e-commerce operator in Budget 2020

• A new
  provision is proposed to insert vide section 194O which provides that if any
  person provides services or sales goods through e-commerce operator then
  e-commerce shall be liable to deduct TDS @ 1% at the time of making payment to
  e-commerce participants.

• If any
  payment is made by buyer of goods or recipient of service directly to supplier
  of goods or provider of service then e-commerce operator shall be liable to
  deduct TDS on such amount also.

• No TDS is
  deductible if gross amount of sales or provision of service does not exceeds
  INR 5 Lacs and e-commerce participant has furnished PAN to e-commerce operator.

• If
  e-commerce participant fails to furnish his PAN then e-commerce operator shall
  be liable to deduct TDS @ 5%.

• No TDS is
  applicable under this section on payment made by e-commerce operator for
  hosting advertisement or providing any other service which is not connected
  with supply of goods or provision of service through e-commerce operator.

• If on any
  transaction, TDS is deducted under this section then no other TDS shall be
  deducted on such transaction.

• Benefit of
  reduced rate of deduction of TDS under section 194LC has been extended till
  01.07.2023 from 01.07.2020. Further, TDS rate has also been reduced to 4% from
  5% on the interest payable to a non-resident, in respect of monies borrowed in
  foreign currency from a source outside India, by way of issue of any long term
  bond or RDB on or after 1st April, 2020 but before 1st July, 2023 and which is
  listed only on a recognised stock exchange located in any IFSC.

• Benefit of
  reduced rate of TDS under section 194LD has been extended till 01.07.2023 from
  01.07.2020 and also concessional rate of TDS has been reduced to 4% from 5% on interest
  payable, on or after 1st April, 2020 but before 1st July, 2023, to a FII or QFI
  in respect of the investment made in municipal debt security.

11. Penalty for fake invoices issued under GST

• If Assessee
  records any false entry in books of accounts or omit to record any entry in
  books of accounts to evade tax then he shall be pay penalty equal to the
  aggregate amount of such false or omitted entry.

• Any person
  who cause to make such false entry or omitted entry shall also be liable to pay
  penalty equal to the aggregate amount of false or omitted entry.

12. Rationalization of provisions of Section 80-IAC

• Section
  80-IAC provide for 100% deduction of profit earned from eligible business by an
  eligible start upfor 3 consecutive years out of 7 years provided that total
  turnover of the business does not exceeds INR 25 Crores.

• Finance Act,
  2020 has proposed to allow deduction for 3 consecutive years out of 10 years
  and also turnover limit has been extended to 100 crores.

13. Other key changes in Budget 2020

• Section
  80-IBA provides for 100% deduction of profits earned from any business of
  developing and building affordable housing project provided approval for such
  project is obtained during the period of 01.06.2016 to 31.03.2020. Such period
  has been extended to 31.03.2021. Similarly, time limit for sanction of such
  loan for the purpose of deduction u/s 80EEA has been extended to 31.03.2021.

• El procedimiento para
  conceder el registro a fondos, fideicomisos, instituciones, universidades u otras
  instituciones educativas, hospitales u otras instituciones médicas conforme a la sección
  10(23C) ha cambiado sustancialmente.

• Se ha propuesto un
  nuevo procedimiento para el registro de fideicomisos conforme a la sección 12A mediante la sección
  12AB recién insertada. Los fideicomisos deberán renovar su registro
  cada 5 años.

• Anteriormente,
  las evaluaciones se realizaban en línea conforme a las secciones 143(1) y 143(3) para mejorar la eficiencia
  y, para ello, se notificó el esquema de evaluación electrónica de 2019 conforme a la sección 143(3A).
  El alcance de dicho esquema se ha ampliado a la sección 144 relacionada con la evaluación
  por mejor criterio.

• Para mejorar la eficiencia, también se propone que las apelaciones ante el CIT(A) se realicen de forma electrónica.

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