The Union Budget 2020 presented on Feb 1, 2020, foresees to stimulate growth, simplify compliance norms and the tax structure.
Highlights of the Budget 2020
The individual taxpayers have the right to choose between a new tax structure with lower tax slabs and the old tax structure with higher tax slabs. The taxpayer who opts for the new tax regime is ineligible to claim deductions and exemptions. Main tax benefits enjoyed under Sections 80C, 80D and 80E will no longer be applicable under the new tax regime.
The below table illustrates a comparison between the old tax regime and the new tax regime:
An Indian citizen who is staying in India less than 182 days during the tax year qualifies as an NRI. But the individuals who carry substantial activities in India are misusing this opportunity by not pay taxes. The budget 2020 proposed to amend this provision by reducing the number of days stay from 182 to 120 days. It proposes to amend the existing laws to provide an individual who is an NRI for seven out of 10 preceding tax years will qualify as an NRO.
Also if the individual is an Indian citizen and he is not taxable in any other country because of his domicile, then he qualifies as a tax resident of India.
Currently, ESOPs are taxable upon the exercise by employees. It proposes to defer the point of taxation of ESOPs granted to employees of eligible start-ups from the date of exercise of shares to five years or the sale of shares or ceasing of employment, whichever is earlier.
DDT is proposed to be abolished and the dividend will be taxable in the individual’s hands as per their tax rates.
A taxpayer charter and faceless appeals are other facets of the budget 2020 aiming to simplify the tax structure and improve overall compliance.