Direct Tax

Significant tax reforms for boosting investments recently undertaken. However, expected tax buoyancy expected to take time.

Direct Tax Proposals: To stimulate growth, simplify tax structure, bring ease of compliance, and reduce litigations.

• Personal Income Tax: New and simplified personal income tax regime proposed to provide significant relief to middle class taxpayers.
• Corporate Tax: Indian corporate tax rates now amongst the lowest in the world. Tax rate of 15% extended to new electricity generation companies.
• Dividend Distribution Tax (DDT): DDT removed making India a more attractive investment destination.Deduction to be allowed for dividend received by holding company from its subsidiary.Rs. 25,000 crore estimated annual revenue forgone.
• Start-ups: Start-ups with turnover up to Rs. 100 crore to enjoy 100% deduction for 3 consecutive assessment years out of 10 years. Tax payment on ESOPs deferred.
• MSMEs to Boost Less-cash Economy: Turnover threshold for audit increased to Rs. 5 crore from Rs. 1 crore for businesses carrying out less than 5% business transactions in cash.
• Tax Facilitation Measures
  • Instant PAN to be allotted online through Aadhaar.
  • ‘Vivad Se Vishwas’ scheme, with a deadline of 30th June, 2020,
  • To Reduce Litigations in Direct Taxes:Waiver of interest and penalty - only disputed taxes to be paid for payments till 31st March, 2020. Additional amount to be paid if availed after 31st March, 2020. Benefits to taxpayers in whose cases appeals are pending at any level.
  • Faceless appeals to be enabled by amending the Income Tax Act.
  • Charity institutions: Pre-filling in return through information of donations furnished by the donee. Process of registration to be made completely electronic. Unique registration number (URN) to be issued to all new and existing charity institutions.Provisional registration to be allowed for new charity institutions for three years.
  • CBDT to Adopt a Taxpayer’s Charter.