As we know that on 01.02.2020 Central government has declared Union budget 2020 (Applicable for FY 2020-21 AY 2021-22). Here are some of the highlights from the finance bill, 2020 discussed hereunder. Let’s have a brief look.
A)This budget has introduced a new tax regime by introducing new tax slab rates for the FY 2020-21
- INCOME TAX SLAB RATES
| Slab | Rate |
| 0 – 2,50,000 | Nil |
| 2,50,000 – 5,00,000 | 5% |
| 5,00,000 – 7,50,000 | 10% |
| 7,50,000 – 10,00,000 | 15% |
| 10,00,000 – 12,50,000 | 20% |
| 12,50,000 – 15,00,000 | 25% |
| > 15,00,000 | 30% |
B)The new tax regime has clearly stated that the tax rates can be availed only if certain deductions and exemptions are not claimed.
C)In the new tax, the regime has continued the following deductions and exemptions:
- 80ccd amounting to Rs. 50,000
- Travel allowance
- Transport allowance (When the employee transfers)
D)The interesting point in the new regime is if the individual opted for the new regime he/she is not allowed to avail deductions.
E)The union has given the option to avail either a new regime or the old regime they can opt for any of the two whichever is beneficial.
F) Dividend is distribution tax is now abolished, now dividend is taxable in the hands of individuals. The only exemption from DDT is the Holding company (parent company) has to pay tax only if the dividend is paid to a subsidiary company (Child Company).
G)Tax rates are reduced to
- 22% to new companies (existing rate 25%)
- 15% to manufacturing companies
- Concessional rate of 15% is extended to power generation companies
H) TDS rate on transactions with non-residents (194 LC) is 5%
I) Cooperative societies have an option to pay tax @22% with no exemption or deduction. and exemption from Alternative minimum tax.
J) The threshold limit for a tax audit is increased from 1 Crore to 5 Crores.