New budget 2020 brought many changes like new personal income tax regime, lowered corporate and business taxes, along with removal of certain legacy rules. While it is difficult for a common taxpayer to understand all the rules, Team EZTax.in put together top 10 frequent questions to get to know and follow
Overall theme of the budget is to put more money in the hands of a taxpayer to encourage spending
Budget 2020 has proposed a new and simplified personal income tax regime where the tax rates are reduced compared to the earlier years for those who forego deductions, and exemptions.
Taxpayers can follow either old regime with deductions or the new tax slabs without deductions. The tax slabs in the new regime are as follows
|0 - 2.5 Lakh
|2.5 - 5 Lakh
|5 - 7.5 Lakh
|7.5 - 10 Lakh
|10 - 12.5 Lakh
|12.5 - 15 Lakh
|above 15 Lakhs
Yes, Rebate u/s 87A of Rs. 12500 is also applicable under New Regime if the Net taxable Income is less than Rs 5 Lakhs. If the Net income exceeds Rs 5 Lakhs, then the above tax slabs will be applicable
The Important observations on the new tax slabs are as follows
The following are some of the new tax Deduction retained under new Tax regime
A sample list of items that you use every day were listed below
Footwear, Cooking Oils, Furniture, Cigarettes, Tobacco products, Medical Devices, Auto parts, CC TVs, Gold, Silver, Chemicals, most of the imported items
Books, News Papers, Sports equipment, Microphones, Solar Panels, Lightweight Coated Papers, Inputs and raw materials like fuse, Chemicals, Plastics, textiles
The threshold limit for Tax Audit has been increased to Rs. 5 Crores from current Rs. 1 Crore. This has been increased to reduce the compliance burden on small retailers, traders, shop keepers who comprise the MSME Sector
Condition: This increased limit will be applicable only to those business which carry out less than 5% Cash Transactions
Earlier, ESOPs were taxable as a perquisite in the year of exercise. The Finance Minister has proposed to ease the burden of taxation on the employees who received ESOPs by deferring the tax payment for five years or till they leave the company or when they sell their shares, whichever is earlier.
Ideally, it should be at the time of selling the shares as the price varies from time to time, for now, we have to live with the above law.
Yes, the e-Commerce Operators are required to deduct TDS @ 1% on the payments made to Suppliers selling through their platform.
TDS @ 1% is required to be deducted if the gross amount of sales or services exceeds Rs. 5 Lakhs in the last fiscal year.
Earlier the TDS rate on fees for Professional Services, and Technical Services was 10%. But from 01/04/2020, the new TDS rates are as follows
Overall, the trend from the earlier budgets and this one is to have a low tax regime for corporate India to thrive. By some measure, India now has the lowest possible tax rate regime both in personal and corporate tax front.