BUDGET 2020 HIGHLIGHTS, ITS IMPACTS AND EXPERTS

COMMENTS

1. IMPACT OF BUDGET 2020 ON EMPLOYEES (3 - 6)

2. IMPACT OF BUDGET 2020 ON BUSINESS (7)

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BUDGET 2020 HIGHLIGHTS, ITS IMPACTS AND EXPERTS
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3. IMPACT OF BUDGET 2020 ON NON RESIDENTS (8)

4. POINTS THAT CA FINAL PREPARES TO BE CONSIDERED (9)

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BUDGET 2020 IMPORTANT POINTS THAT IMPACT EMPLOYESS WORKING IN

CORPORATES:

Income Zero to 2.5 Lacs: Nil (Salary below 2.5 lacs no tax)
2.5 Lacs to 5 lacs: 5% (this can be claimed as rebate if total income is below 5 lacs)
5 Lacs to 7.5 Lacs: 10% (If income is 6 lacs then tax is calculated as up to 2.5 lacs “0”. And on 2.5 lacs to 5 lacs tax
is 12500 and on additional 1 lacs (6 – 5) 10% I..e 10,000/-

7.5 Lacs to 10 Lacs: 15% (If income is 9 lacs then tax is calculated as up to 5 lacs “12,500”. And on 2.5 lacs is
10% and from (9 -7.5) is 15%

10 Lacs to 12.5 Lacs: 20% (If income is 11 lacs then tax is calculated as up to 5 lacs “12,500”. And on 2.5 lacs is
10%i.ee 25000 and another 2.5 lacs is 15%i.ee 37500 and from (11 – 10) is 20%

12.5 Lacs to 15.00 Lacs: 25% (If income is 14 lacs then tax is calculated as up to 5 lacs “12,500”. And on 2.5 lacs is
10% i.ee 25000 and another 2.5 lacs is 15% i.ee 37,500 and further 2.5 lacs is 20% from (14 – 12.5) is 25%

Income above 15.00 Lacs: 30% (If income is 50 lacs then tax is calculated as up to 5 lacs “12,500”. And on 2.5 lacs
is 10% i.ee 25000 and another 2.5 lacs is 15% i.ee 37500 and further 2.5 lacs is 20%i.ee 50000 and another 2.5 lacs is
25% and from (50– 15) is 30%

(Health and education cess is 4%)

AS PER THE NEW SCHEME EMPLOYEE CANNOT AVIAL S. 80 EXEMPTIONS EXCEPT 80

CCD (1B)
Hence govt has given an option to employees to choose the scheme that are more beneficial to them

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Expert comments:

Old Regime New Regime 1

Saving
More
Gross Income Deduction Taxable Income Taxable Income (New Vs
Beneficial
(In Lakh) Under 80C Income Tax Income Tax Old
Regime
Regime)

3.5 lakh 1.5 lakh 2 lakh 0 3.5 lakh 0 0 No change

4 lakh 1.5 lakh 2.5 lakh 0 4 lakh 0 0 No change

4.5 lakh 1.5 lakh 3 lakh 0 4.5 lakh 0 0 No change

5 lakh 1.5 lakh 3.5 lakh 0 5 lakh 0 0 No change

5.5 lakh 1.5 lakh 4 lakh 0 5.5 lakh 18,200 -18,200 Old

6 lakh 1.5 lakh 4.5 lakh 0 6 lakh 23,400 -23,400 Old

6.5 lakh 1.5 lakh 5 lakh 0 6.5 lakh 28,600 -28,600 Old

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7 lakh 1.5 lakh 5.5 lakh 23,400 7 lakh 33,800 -10,400 Old

7.5 lakh 1.5 lakh 6 lakh 33,800 7.5 lakh 39,000 -5,200 Old

8 lakh 1.5 lakh 6.5 lakh 44,200 8 lakh 46,800 -2,600 Old

8.5 lakh 1.5 lakh 7 lakh 54,600 8.5 lakh 54,600 0 No change

9 lakh 1.5 lakh 7.5 lakh 65,000 9 lakh 62,400 2,600 New

9.5 lakh 1.5 lakh 8 lakh 75,400 9.5 lakh 70,200 5,200 New

10 lakh 1.5 lakh 8.5 lakh 85,800 10 lakh 78,000 7,800 New

10.5 lakh 1.5 lakh 9 lakh 96,200 10.5 lakh 88,400 7,800 New

11 lakh 1.5 lakh 9.5 lakh 1,06,600 11 lakh 98,800 7,800 New

11.5 lakh 1.5 lakh 10 lakh 1,17,000 11.5 lakh 1,09,200 7,800 New

12 lakh 1.5 lakh 10.5 lakh 1,32,600 12 lakh 1,19,600 13,000 New

12.5 lakh 1.5 lakh 11 lakh 1,48,200 12.5 lakh 1,30,000 18,200 New

13 lakh 1.5 lakh 11.5 lakh 1,63,800 13 lakh 1,43,000 20,800 New

13.5 lakh 1.5 lakh 12 lakh 1,79,400 13.5 lakh 1,56,000 23,400 New

14 lakh 1.5 lakh 12.5 lakh 1,95,000 14 lakh 1,69,000 26,000 New

14.5 lakh 1.5 lakh 13 lakh 2,10,600 14.5 lakh 1,82,000 28,600 New

15 lakh 1.5 lakh 13.5 lakh 2,26,200 15 lakh 1,95,000 31,200 New

15.5 lakh 1.5 lakh 14 lakh 2,41,800 15.5 lakh 2,10,600 31,200 New

16 lakh 1.5 lakh 14.5 lakh 2,57,400 16 lakh 2,26,200 31,200 New

(The examples given above are based on the assumption that the assessee fully utilizes the
exemptions available under Section 80C in the old structure and gives them up in the new
structure.)

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 Contributions exceeding INR 7, 50,000 made by employer to an employee’s account in a

recognized provident fund, notified pension scheme or approved superannuation fund would be
taxable perquisite in the hands of the employees.

 Securities issued under Employee Stock Benefit Plans by employers are taxable in the hands of
the employees at the time of their exercise (i.e. allotment). But in case of startup company’s
employees of Startup companies. Employees will now have to pay tax not at the time of
allotment of securities but at the time of exit from the company or selling the shares or for a
period of 5 years whichever is earlier."

Expert Comments
According to the proposal, the tax in such a scenario will now be required to be paid as follows:
i) after the expiry of 5 years from the end of the relevant financial year in which shares are allotted;
or
(ii) from the date of the sale of such specified security or sweat equity share by the employee; or
(iii) from the date on which the employee ceases to be the employee of the person;

Such tax has to be deposited within 14 days of any of the above-mentioned event takes place.

 Abolition of DDT on companies and adds additional burden of taxing dividend from all sources
such as shares & mutual funds to individuals (Tds @10% if div >5000)

 Filing of statement of donation by donee to cross-check claim of donation by donor. (So

employees claiming deductions under 80G please be carefull).

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Impact of Budget 2020 on Business

In order to reduce compliance burden on small and medium enterprises, it is proposed to increase
the threshold limit for a person carrying on business from one crore rupees to five crore rupees in
cases where,-
(i) Aggregate of all receipts in cash during the previous year does not exceed five per cent of such
receipt; and
(ii) Aggregate of all payments in cash during the previous year does not exceed five per cent of such
payment
Ceiling Limit of turnover for TDS / TCS compliance – Now it is proposed that reference to the
limit of tax audit to be removed and fixed ceiling limit of Rs 1 Crore turnover / receipts in previous
year to be amended.
 Tax on cooperative societies reduced to 22% without exemptions

 Interest and penalty will be waived for those who wish to pay the disputed amount till March 31.

 Aadhaar-based verification of taxpayers is being introduced to weed out dummy or non-existent

units; instant online allotment of PAN on the basis of Aadhaar.

 * Registration of charity institutions to be made completely electronic, donations made to be

pre-filled in IT return form to claim exemptions for donations easily.

 Tax burden on employees due to tax on ESOPs to be deferred by five years or till they leave the
company or when they sell, whichever is earliest.

 Start-ups with turnover up to Rs. 100 crore to enjoy 100% deduction for 3 consecutive
assessment years out of 10 years.

 To help bank depositors, government increases depositor insurance to Rs 5 lakh from current
Rs 1 lakh

 S.271AAD PENALITY FOR FAKE INVOICE = AGGREGATE AMOUNT OF SUCH

FALSE/OMITTED ENTRY

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IMPACT OF BUDGET 2020 ON EXPATRIATES WORKING ABROAD

 AMMENDMENTS IN RESIDENCY :-

If anindividual who is a citizen of India or person of Indian origin visits India for 120 days or
more in a financial year and had spent more than 365 days in last four years, then such an
individual will also become ‘resident’ in India.( Earlier it is 182 days of stay)
&
If persons satisfies the above condition for 4 years out of 10 years then he will be treated as
RESIDENT AND ORDINARY RESIDENT.

So if person satisfies the above conditions and working in any tax free countries are liable to tax
in India (Eg. Working in UAE)

Expert comments:

The above amendment of finance bill raises a conflict with “Double Tax Avoidance Agreement”
between INDIA and UAE. Hence government needs to amend the above agreement in order to
impact the taxation.

Clarifications from sources:

“An NRI living in another country earns money there, which is not taxed there at all, but has
some earnings through something in India and does not pay tax here either because he does not
live here. What we are saying is this: for the income generated in India, pay a tax. If you have a
property here that generates rental income, but because you live there, you carry this income
there and pay tax neither there nor here,’’ Finance Minister Nirmala Sitharaman said in a press
briefing on Sunday.

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BUDGET 2020 HIGHLIGHTS, ITS IMPACTS AND EXPERTS
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AMMENDMENTS TO BE CONSIDERED BY CA ASPIRANTS

FROM THE BUDGET 2020

Amendments in tax Rates Scope of DRP expanded

Cooperative societies Taxation
Sec 80 M
Amendments over NRI Rules
Sec 80 IAC
Finance bills given an option to
assesses to choose either sec
35AD or Sec 32
194A Interest payments by
cooperative societies to its
members subject to:-
Total T/o should exceed 50
crores and max Interest 40,000
per payee
TCS on Foreign remittances
through LRS if more than
750000 in a fin year TDS@5%
TCS on sale of goods where
total turnover exceeds 10 crores
in a F.Y and consideration
received from a buyer is more
than 50 lacs @ 0.1%(1% if no
pan)
E Appeals on the way
Amendments over power to
survey
271AAD Penalty
S.55 Computation of cost of
Acquisition to include stamp
duty value along with FMV for
considering value for 2001.
194 J TDS on Technical services
revised to 2%
194O ECO on Payments made
by them to Electronic commerce
participants for sale of goods
through online platforms if
gross payments exceed 5 lacs
then TDS@1%
TCS on foreign tour package by
seller @ 5%

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BUDGET 2020 HIGHLIGHTS, ITS IMPACTS AND EXPERTS
COMMENTS

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