Hon’ble Finance Minister, Government of India, while presenting the Union Budget 2020 today stated that her proposals are structured around the themes of ‘Aspirational India’, ‘Economic Development’, and a ‘Caring Society’. As we start decoding the fine print of her tax proposals please find hereinbelow key tax highlights of the Finance Bill, 2020.
PROPOSALS REGARDING CHANGES IN DIRECT TAXES
• Corporate Tax
Dividend Distribution Tax of 15% payable by companies will not be payable for dividends declared after 31st March 2020
Reduced tax rate of 15% provided earlier for new manufacturing companies will now also be available to companies engaged in electricity generation
Companies availing the reduced tax rate of 15% will also be eligible for deduction in respect of any profits from processing of biodegradable waste
Start-ups having turnover of up to INR 1000 million will now be eligible for 100% tax concessions in any three of ten years since commencement of business
Relief available to real estate companies engaged in construction of ‘affordable housing’ will be extended to projects approved up to 31.03.2021
Special tax regime applicable to listed Infrastructure Investment Trusts (InvITs) and Real Estate Investment Trusts (REITs) is proposed to be made available to unlisted Infrastructure Investment Trusts also
Income of Sovereign Wealth Funds fulfilling certain conditions from interest dividends and capital gains from investments in Infrastructure facilities in India will be exempt
• International Tax Issues
Definition of ‘Resident’ is being modified to treat Indian citizens who are not liable to tax in any other country by reason of domicile or residence or any other such criteria, as resident in India for tax purposes
Definition of ‘significant economic presence’ introduced last year for determining ‘business connection’ of a non-resident in India is proposed to be modified
An amendment is proposed to empower Government to enter into tax treaties with other countries to implement the Multilateral Convention signed by India under the BEPS program of OECD and G-20 countries. This will enable modification of existing treaties to plug opportunities of double non taxation, treaty shopping etc.
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