Budget Highlights (Taxation)

Budget Highlights (Taxation) 🌴FM Nirmala Sitharaman has thanked taxpayers for their valuable contribution through taxes for all-round development of the country. 🌴She quotes a verse in Tamil -- 'Just a few mounds of rice cooked from a small piece of land is enough for the elephant. But if the same elephant enters a paddy field it will end up trampling more than it would consume'. 🌴Explaining the verse, she says the government does not intend to 'trample' anybody like the elephant. 🌴Direct tax revenue has grown 78 percent from 2014 to 2019. 🌴Currently, 25 percent corporate tax rate is applicable to companies with an annual turnover of up to Rs 250 crore. This has been extended to companies with turnover of up to Rs 400 crore. Only 0.7 percent companies will remain outside of this 25 percent rate. 🌴Additional income tax deduction of Rs 1.5 lakh on interest paid on loans taken to buy electric vehicles. This leads to a benefit of Rs 2.5 lakh crore over the tax period of the loan for the loan payer. 🌴To resolve the issue of Angel Tax the startups and investors who file requisite declarations will not be subjected to any kind of scrutiny in respect of valuation of share premium. A mechanism of e-verification will be put in place and with this, the funds raised by startups will not require any tax scrutiny. 🌴FM Nirmala Sitharaman proposes measures to carry forward and set off losses for startups and increase in period of exemption of capital gains from the sale of residential house for investment in startups up to March 2021. 🌴An additional deduction of Rs 150000 on interest on loans borrowed under affordable housing until 2020 (upto 45 Lakhs) 🌴Interchangeability of PAN and Aadhaar - More than 120 crore Indians now have Aadhaar. Sitharaman proposes to make the two documents interchangeable so that Aadhaar can be used for verification with no requirement for PAN. 🌴The Securities Transaction Tax or STT is proposed to be restricted to the difference between settlement and strike price of options. 🌴Our government has taken number of initiatives to promote digital payments. FM says to discourage the practice of making business payments in cash the government proposes to levy TDS of 2% on cash withdrawal exceeding Rs 1 crore in a year from a bank account, she says. 🌴BHIM, UPI, Aadhaar Pay, NEFT, RTGS can be used to promote less cash economy. Business establishments with annual turnover of Rs 50 crore will have to use these modes of payments with no charges or merchant discount rates will be imposed on customers or merchants. RBI and banks will absorb these costs, she says. 🌴##Direct Taxes - In view of rising income levels, a surcharge will be levied on individuals with taxable income of Rs 2 to 5 crore, and Rs 5 cr and above. The effective tax rate for these categories will increase by around 3% and 7%, respectively. GST rates have been eased with a relief of Rs 92,000 crore provided during the year. Further measures are being worked out to ease filing returns and tax compliance. A simplified single monthly return is now being ruled out. Taxpayers with an annual turnover of less than Rs 5 crooe will have to file only quarterly returns, she says. 🙏 #shrikhand