Union Budget 2020-21

Enlarging the Scope of
TDS u/s 194A

Requirement of TDS on interest u/s. 194A to be
also applicable to co-operative society where:

Total sales, gross And Interest or the
receipts or
aggregate of the
turnover > Rs. 50 amount paid or
Crore credited of such
interest exceeds:

Applicability
of Sec 194A

Rs.50,000 in case of Rs. 40,000

senior citizen in other

cases

101

Widening the scope of
TDS on e-commerce

transactions Insertion of

Sec. 194-O

E-Commerce •
Participants

E-Commerce
Facilitators

To deduct TDS Purchasers
@ 1% on gross
amount of sale E-commerce participant (being an
of such goods individual or HUF) whose gross sales or
and services. services through E-commerce
operator during PY does not exceed
Exclusions Rs.5 lakh and has furnished PAN or
Aadhaar number

102

Expanding provisions for
Tax Collection at Source

TCS u/s. 206C now proposed for sale of overseas tour
package or for any overseas remittance under LRS:

Receives for remittance
outside India under LRS in
excess of Rs. 7.5 lakh in a FY;
or

Receives any amount for

sale of overseas tour

Authorised Dealerpackage Remitter / Buyer

TCS @ 1% / @10% (non Not applicable to
furnishing of PAN / Aadhar) buyer if he is liable

to deduct TDS
under any other
provision of the act
and such other
notified persons.

103

Expanding provisions for
Tax Collection at Source

TCS u/s. 206C now proposed on Sale of goods:

Who shall do TCS?

Seller of goods – TCS- @0.1% on consideration
received from buyer in PY in excess of Rs. 50,00,000

In case of non PAN/Aadhar - @ 1%

Conditions:
1. Applicable to seller whose total sales, gross receipts

or turnover > Rs.10cr
2. TCS under this section is not applicable if the seller is

liable to collect TCS under other provision of section
206C or buyer is liable to deduct TDS and has
deducted such amount.

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6. Revenue Mobilization
Measures

105

Commodity Transaction
Tax(CTT) on new commodity

derivative products.

0.01% payable • On sale of commodity derivative
by the seller based on prices or indices of
prices of commodity derivatives

0.001% • On sale of an option in goods
payable by (resulting in actual delivery)
purchaser

0.125% • On sale of an option in goods
(resulting in a settlement)
payable by

the purchaser

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7. Improving Effectiveness
of Tax Administration

107

Modification of e – assessment scheme

Amendments in Sec 143

Scope of Sec 143(3A) Power of Central
to also include government to provide
any directions u/s 143 (3B)
Assessment made extended till 31-03-2020
u/s 144

w.e.f 01-04-2020

Amendment in Dispute Resolution Panel (DRP)

Amendments in Sec 144C

Draft Asst. Order to be Eligible Assessee to
passed in every cases also include all
having variation, which is
prejudicial to the interest Non-residents, not
of Eligible Assessee being a company

108

Provision for e - appeal Faceless
Appeal
To insert Sec 250 (6A) for
empowering Central Govt. w.e.f.
to notify an e – appeal 01-04-2020
scheme for disposal of
appeal before CIT(A).

Providing Check on Survey operations u/s 133A

Information Income Authorities below the
recd. from the rank of JCIT or JDIT, shall not
conduct any survey u/s 133A(6)
prescribed w/o approval of JCIT or JDIT
Authority
No Income Tax Authorities below
Any other the rank of Commissioner or
Cases
Director, shall conduct any survey
u/s 133A w/o approval of
Commissioner or Director.

109

Clarity on Stay by the Income Tax Appellate
Tribunal (ITAT)

• If assessee has to deposit
atleast 20% of the amount
of tax, interest, fee, penalty
or any other sum payable
under the IT Act; or

ITAT to • furnishes security of equal
grant stay amount.

w.e.f.
01-04-2020

Provision for e - penalty

To insert Sec 274 (2A) for empowering
Central Govt. to notify an e –scheme for
penalty proceedings.

110

Insertion of Taxpayer’s Charter in the Act

Sec 119A to be inserted to empower Central Board of
Direct Taxes to adopt and declare Taxpayer’s Charter
and issue orders, instructions, directions or guidelines
to Income-Tax Authorities for the administration of
Charter.

w.e.f.
01-04-2020

111

8. Preventing Tax Abuse

112

Modification of residency provisions

Currently, certain Indian Citizen and Person of India
Origin, residing in India for more than 365 days out of
4 years immediately prior to the relevant previous year,
continue to be non-resident in India until they stay in
India, during the previous year, for more than 182 days.

Sec 6(1),
Clause b

Above threshold is set to be changed to 120 days.

Indian citizen, who is not liable to tax in any other
county or territory by reason of his domicile or
similar criteria, shall be deemed resident in India.

w.e.f 01-04-2021

113

Modification of residency provisions

Relaxing conditions for becoming ‘ordinary’
tax resident in India.

Condition of
being ‘non-
resident’ in India
for at least 9 out
of 10 yrs. is to be
changed to 7 out

of 10 yrs.

Condition of
staying in India
for not > 729
days is to be

omitted.

w.e.f 01-04-2021

114

Expanding the scope of ‘’WORK’

Work u/s. 194C:
To provide that ‘contact manufacturing’ where
raw materials are provided by the Assessee or
its Associate shall fall within the purview of
‘’WORK’ u/s. 194C

w.e.f.
01-04-2020

115

9. Rationalizing provisions

116

Aligning of DTAA with MLI

Amendments in Sec 90A(1)(b)

After the words “specified territory outside India,”, the words
“without creating opportunities for non-taxation or reduced
taxation through tax evasion or avoidance (including
through treaty-shopping arrangements aimed at obtaining
reliefs provided in the said agreement for the indirect
benefit to residents of any other country or territory),” shall
be inserted.

w.e.f 1st April 2021

Amendments in Sec 90(1)(b)

After the words “as the case may be,”, the words “without
creating opportunities for non-taxation or reduced taxation
through tax evasion or avoidance (including through treaty-
shopping arrangements aimed at obtaining reliefs provided
in the said agreement for the indirect benefit to residents of
any other country or territory),” shall be inserted.

w.e.f 1st April 2021

Extending Source Rule

Significant Economic Presence (SEP) Rule is
proposed to be expanded so as to include:

• income from advertisement that targets Indian
customers; or

• income from sale of data collected from India;
or

• income from sale of goods and services using
such data collected from India.

Current SEP Rule is deferred to FY 2022-23.

Aligning Exemption from
Taxability of FPIs

Current

An asset or capital asset being any share or interest in a
company or entity registered outside India is deemed to
be and always deemed to have been situated in India if
the share or interest derives, directly or indirectly, its
value substantially from the assets located in India with
exceptions to asset or capital held by a non-resident by
way of investment in Category I and II FPIs under SEBI
(FPI) Regulation Act, 2014.

Proposed

Similar exception is now proposed to be provided to
investment in Category I FPI under SEBI (FPI) Regulation

Act, 2019

w.e.f 1st April 2020

Rationalisation of Definition of
Royalty w.e.f 1st April 2021

Royalty is proposed to include consideration for the sale,
distribution or exhibition of cinematographic films

Abolishing of DDT u/s 115-O

Dividend Distribution

w.e.f 1st April 2020

It is proposed to abolish Dividend Distribution Tax and to
revive taxation of dividend u/s. 56 of the Act in the hands of
shareholders or unit holders at their applicable tax rate.

It is also proposed to provide that the deduction for
expense under section 57 of the Act shall be maximum 20
per cent of the dividend or income from units.

Rationalisation of Computation
of Cost of Acquisition

In case of a capital asset, being land or building or both,
the fair market value of such an asset on 1st April, 2001
shall not exceed the stamp duty value of such asset as on
1st April, 2001 where such stamp duty value is available.

Filing of Statement of donation

• Exempt entity to report all the donations
received by furnishing a statement to
enable cross-check claim of donation by
donor.

• Levy of a fee and penalty may also be
levied in case of failure.

Major amendments related to
sections 10(23C) 10(46),
80G/80GGA

• Apply for approval or registration

or intimate reg. it being approved

and on doing so, the approval

Entities registered shall be valid for only for a period
u/s. 10(23C), 12AA, of 5 years calculated from
1/4/2020.
35, 80G

• an entity making fresh application

for approval u/s 10(23C) or 12AA

or 80G shall be provisionally

approved or registered only for 3

Provisionally years w/o detailed enquiry. 6

approved or months prior to the date of

registered for 3 yrs expiration of provisional certificate

or 6 months from start of

activities, it shall apply again for

approval.

122

Pushing the Tax Audit
Threshold Limit

Section 44AB threshold limit for business

1 Crore 5 Crores

Provided, aggregate of all receipts and payments in cash
during the previous year does not exceed 5% of such
receipts and payments

Enabling auto-filing of tax return

Existing

Currently Form 26AS contains the information about tax
collected or deducted at source or tax paid standing to the
credit of the Assessee.

Proposed

With the introduction of Section 285BB along with tax credit
details, multiple information in respect of a person such as
sale/purchase of immovable property, share transactions etc.
would be captured. This information will be provided to the
assessee by uploading the same in the registered account of
the assessee.

Section 203AA to be deleted

124

E. Indirect tax
Amendments

125

126

Simplified Reforms

Simplified process of returns with SMS
base validation, prefilled information and
improved input tax credit flow.

Fully automated and Simplified
refund process.

Introduction of e-invoicing system with
effect from 1st April 2020 for registered
persons having annual turnover of > 100
cr.

127

Simplified Reforms

QR-code for all B2C invoices by
registered persons having annual
turnover >500 cr. with effect from 1st April
2020 and on voluntary basis from 1st
March 2020.

Use of deep Data Analytics and AI
tools to identify fraudulent input tax
credit and refunds.

Aadhaar based verification and
authentication of taxpayers.

128

Key Amendments

➢ No concept of
late fee for non
furnishing of
TDS Certificate
by Deductor.

➢ Facility of
Cancellation of
registration is
open for
voluntarily
registered
assesses.

➢ Inclusion of Ladakh in the definition Union Territory
under section 2(114) of the CGST Act 2017.

129

Equal tax amount of penalty for undue retaining
the benefits in the following cases:

➢ Supply of goods or services without issue
or false or incorrect invoice.

➢ Issue of invoice without supply of good
or services.

➢ Avails or utilization of Input Tax Credit
without actual receipt of goods or
services.

➢ Liable to registration but fails to obtain
registration.

130

➢ Removal of

Difficulties: Revision

of time limit up to 5

years for issue of

general or special

order by Central

Government for

removal of any

difficulties under the

provisions of the

Act.

➢ New levy of Health
Cess at 5% on
import of certain
medical devices.
The Cess is utilized
for financing the
health
infrastructure and
related services.

131

132

Key Amendments

➢ Introduction of new provisions for preferential
rate of duties for imported goods under New
trade agreements.

➢ Rationalization and review of customs duty
exemption for certain imported goods.

➢ Reduction of customs duty on imports of
newsprint and light weight coated paper from
10% to 5%.

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