Highlights of Budget 2020

Highlights of Budget 2020

A.   Tax for individuals:

  • A new tax regime, a person can move to a new tax slab structure which has 5 tax slabs however he cannot take any tax exemptions. The new tax slab structure has lower marginal tax rates for income up to Rs 15 lakh, when compared to the tax slab structure under the old tax regime.
Taxable income slabs Tax Rates
Up to Rs 5 lakh NIL
Rs 5 Lakh to Rs 7.5 Lakh 10%
Rs 7.5 lakh to Rs 10 lakh 15%
Rs 10 lakh to Rs 12.5 lakh 20%
Rs 12.5 lakh to Rs 15 lakh 25%
Rs 15 lakh and above 30%

Which option to choose? Old tax or new tax regime?

Budget 2020 has come up with the option of new income tax slab, under new slab you have an option of paying tax with lower tax rates but you cannot claim any exemptions/deductions or you can continue to pay tax under the existing income tax laws by claiming the exemptions and deductions. Which tax regime to choose depends on case to case basis. If an individual was claiming higher exemptions he is less likely to get benefit under the new regime.

  • For Financial Year 2020-21, taxpayers can opt any of these two options.
  • Dividend Distribution Tax has been withdrawn and dividend income shall be taxable in the hands of the recipient at applicable rates.

B.   The tax effect for Corporate

  • The corporate tax for newly set up manufacturing and power generation companies have been reduced to 15%.
  • Co-operative societies have been given the option to pay tax @ 22% without any deductions.
  • Dividend Distribution Tax has been withdrawn and dividend income shall be taxable in the hands of the recipient

C.  MSME Sector

  • Currently, businesses having a turnover of more than ₹1 crore are required to get their books of accounts audited by an accountant. For Medium, Small and Micro Enterprise (MSME) sector, Turnover limit for audit of MSMEs to be increased from Rs 1 crore to Rs 5 crore, to those businesses which carry out less than 5% of their business in cash.

D.  Indirect Tax :

  • Customs duty raised on footwear to 35% from 25% and on furniture goods to 25% from 20%.
  • Excise duty proposed to be raised on Cigarettes and other tobacco products, no change made in the duty rates of bidis.
  • Basic customs duty on imports of newsprint and light-weight coated paper reduced from 10% to 5%.
  • Customs duty rates revised on electric vehicles and mobile parts
  • Health cess 5% to be imposed on the imports of medical devices, except those exempt from BCD.
  • Lower customs duty on certain inputs and raw materials like fuse, chemicals, and plastics.
  • Higher customs duty on certain goods like auto-parts, chemicals, etc. which are also being made domestically.

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Related Blog – INCOME TAX EXEMPTIONS/DEDUCTIONS

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The CAONWEB Team comprises qualified chartered accountants and experienced investment experts who are passionate enough about finances to bring you the best advice and tips on everything related to your hard-earned money.