Following are the major & important amendments proposed by the Hon’le Finance Minister in her budget presented on 1st February 2020:

1. Rates of Income tax

The Finance Minister has given option for two schemes of rates of taxation and assesse is free to choose any one of the following schemes:

*Conditions:

A   Deduction u/ch VI-A not to be claimed:

In case where lower rates of taxation are opted (i.e. new proposed scheme), deduction under chapter VI-A shall not be allowed. To elaborate, no deduction u/s 80C (Investments in PPF, LIC, NSC etc.), u/s 80D (Medi-claim), u/s 80E (Interest on Education loan), u/s 80G (Donation), u/s 80U (Disability deduction), u/s 80GGA & u/s 80GGC (donation to political parties) etc. are not allowed to be claimed. However the only deduction that shall be allowed are, u/s 80CCD (National Pension System upto Rs. 50,000/-) and u/s 80 JJA (Deduction in respect of employment of new employees from business income). Further    a salaried employee would not be able to claim deduction of leave travel allowance, House rent allowance, Standard deduction or other exemption for allowances and perquisites. Also a business assesse would not be able to set off brought forward loss and unabsorbed depreciation.

B   Further conditions:

An Individual or HUF having Business Income would be able to exercise the option once and shall be valid for all subsequent years. This option can be withdrawn only once for a previous year thereafter he shall never be able to exercise option under this section. An Individual or HUF having no Business Income shall be able to exercise this option in every previous year.

2 Residential Status :

An Individual shall be treated as resident if he has been in India for a period of 120 days or more (earlier it was stay of 182 days or more in India) in a year or has been in India for a period of 365 days or more within 4 years preceding that year.

3 Due Dates for filing Return of Income:

Certain changes have been proposed in respect of due dates for filing of Return of Income.

4 Dividend Distribution Tax:

According to the proposed amendment, Companies would no longer be required to pay Dividend Distribution Tax (DDT) from now onwards. However, Dividend shall be taxed in the hands of recipient of Dividend at the applicable rates of Income tax.

5 Audit of Books of Accounts:

It is proposed to raise limit of turnover for the purpose of getting books of accounts audited u/s 44AB from Rs. 1 crore to Rs. 5 crore. However, the increase in limit of audit turnover is applicable only subject to following conditions:

(i) Aggregate of sales / turnover or gross receipts in cash does not exceed 5% of total sales/turnover or receipts during the financial year

AND

(ii) Aggregate of expenditure in cash does not exceed 5% of total expenditure.

6 Cost of Acquisition for Long term capital gain:

In respect of asset acquired before 1st April 2001, the Fair market value as at 01-04-2001 shall not exceed the stamp value as on 01-04-2001. As such, an assessee would not be able to claim Fair market value in excess of Stamp duty value limiting thereby the benefit of Indexation.

7 Lower TDS on fees for Technical Services:

Under the amended proposal TDS is required to be deducted at 2% instead of 10% on fees for technical services other than professional services.

8 TDS on E-commerce transactions:

Under this proposal, a new section 194-O is proposed to be inserted where, TDS @ 1% would be required to be deducted from the gross amount of sales or services or both payable by e-commerce operator (owner of the e-commerce platform) to e-commerce participant (who uses the e-commerce platform for providing services or selling goods). However no TDS would be made in case of Individual or HUF if gross amount of sales or services does not exceed Rs. 5,00,000/- AND the individual or HUF provides PAN / Aadhar to the e-commerce operator.

9 Vivad Se Vikas Scheme:

According to us, this is the major highlight of this Budget. This government has taken many steps in past few years to reduce the tax litigations. The Sabka Vishwas scheme resulted into settling over 1,89,000 cases.

As of now, there are almost 4,83,000 direct tax cases pending in various appellate forums i.e. Commissioner (Appeals), ITAT, High Court and Supreme Court. Under the "Vivad Se Vikas" scheme, a tax payer would be required to pay only the amount of disputed taxes and will get complete waiver of interest and penalty portion, provided that the Taxpayer pays the tax amount by 31st March, 2020. Those who avail this scheme after 31st March, 2020 will have to pay a certain additional amount. The scheme will remain open till 30th June, 2020.

Taxpayers in whose cases appeals are pending at any level can avail benefit from this scheme.

Authored by-

Shaishav D. Mehta, FCA

(E) shaishav@sdmca.in

Highlights of Economic Reforms announced by our FM

As all are aware the Indian Economy is facing a slow-down. There is a fear of unemployment on a large scale in private sector. There was a pressure on government to come with relief measures to save the economy and depressed capital market.  Finance Minister Mrs. Sitharaman announced certain measures to revive economy and capital market. She has also assured further measures in a short-while to stimulate economy.  The following is the summary of measures announced by the Finance Minister on 23^rd August 2019:

1. Income Tax:

• Enhanced surcharge levied on short term and long term capital gain as announced in recent budget has been withdrawn. The withdrawal of surcharge applies to capital gain arising from equity shares/unit referred to in Section 111A and 112A.
• To mitigate with complaints of harassment of taxpayer on account of issue of notices summons order and other correspondence by Income Tax authority, it has now been announced that on or after 1^st October 2019 all notices summons orders etc. issued by the Income tax department shall only be issued through a centralized computer system. All such documents shall contain a computer generated Unique Document Identification Number. Any communication issued without such identification number shall be invalid in Law. Old notices issued before 1^st October shall either been disposed of or shall be uploaded again through centralized computer system. Also, all notices issued after 1^st October 2019 shall be disposed of within 3 months from the date of reply by the assesse.
• Angel Tax provisions under Section 56(2)(viib) of the Income Tax Act shall not be applicable to all startup units registered with DPIIT. For quick disposal of Income Tax issues faced by startup unit a specific cell shall be started under a member of CBDT.
• An additional depreciation of 15 % shall be allowed on all vehicles acquired during the period from now to 31^st March 2020 (a total of 30% depreciation shall be allowed on such vehicles).

2. Banking:

     In order to infuse funds in the banking system, following measures have been announced:

• Government shall immediately release Rs. 70,000 crores to public sector banks by Means of Capital. Further additional liquidity to the tune of Rs. 5,00,000 crores shall also be provided to public sector bank over a period of time. This measure is going to benefit immensely to all small borrowers, small and medium enterprises and corporate houses. The idea of infusing fund appears to be for making easy credit facility available to all segment of economy.
• Bank shall directly link repo rate to interest rate. This means any such rate cuts shall result in reduced EMI for all types of loan including vehicle loan, housing loan etc. This measure would also result in availability of working capital at a cheaper rate of interest.
• One time settlement of loans and credit facility shall be easier. The OTS shall depend on certain specific criteria to be complied with by borrowers. This policy change is going to benefit MSE and small borrowers. Also the system of OTS would now be more transparent.
• The banking customer would now be able to track the status of their all kinds of loan applications online. The customers would also be able to track renewal enhancement of limits, etc.
• In order to protect honest decision making by banking officials in the commercial matters, it has been specified that internal advisory committee shall classify cases as vigilant and non-vigilant.
• It is made mandatory by public sector bank to return loan documents belonging to borrowers within a period of 15 days of closure of loan.

3. Non-Banking Finance Companies (NBFC):

    A number of welcome measures are announced to infuse liquidity in NBFC and HFC (Housing Finance Companies)

• National Housing Board (NHB) would release additional liquidity to the tune of Rs. 20,000/- crores to HFC. This should enable more credit for purchase of houses.
• From now onwards, prepayment notices issued to NBFC are to be monitored by banks.
• To prevent repeated procedure, NBFC are now authorized to issue Aadhar authenticated Bank KYC. This would enable easy approach to consumer by NBFC.
• The public sector banks shall now make fast-track collaboration with NBFCs for loans to small traders, self-employed people and MSMEs. All the above measure would ensure more liquidity support for purchase of consumer goods, vehicle, houses etc. by small and retail borrowers.

4. GST:

    Following provisions are announced in GST:

• All pending GST refund to MSMEs shall be paid within 30 days. All GST refund arising in future shall be paid within 60 days from the date of application.
• Bill discounting facility by PSB shall be made easily available for MSMEs which are registered in GSTN system.
• From now onwards, all GST return filing procedures shall be simplified.

5. Other Measures:

• In respect of listed companies NBFC and HFC, the requirement of creation of Debenture Redemption Reserve fund has been removed.
• In respect of companies focus shall be on monetary penalties. Not fulfilling CSR shall be a civil offence and not a criminal one.
• For credit enhancement to infrastructure sector, Government is proposing to establish a specific organization.
• To enable Indian Companies to have easy and increased access to foreign funds through ADR / GDR, The Depository Receipt Scheme 2014 shall be soon made operational By SEBI.
• Aadhar based KYC shall be permitted for opening Demat account and making investment in mutual fund. This step would benefit retail and small investor to have easy market access.
• KYC procedure is simplified for FPIs.
• It is proposed to permit trading of USD- INR Derivatives in GIFT, ISFC.
• The higher one time registration fee on vehicle is deferred till the month of June 2020.
• The ban on purchase by Government of new vehicles for replacing old vehicles shall be lifted shortly. Both electric and internal combustion vehicle shall continue to be registered.
• From now onwards, delayed payment from Government department shall be closely monitored by department of expenditure.
• Bond market in India shall be deepened.

The forgoing was a summary of certain important measures taken by Government to face the problem of economic slow-down. The FM has further promised stimulus measures to be announced shortly in this regard. The measures if implemented properly shall definitely put the Indian economy in upper gear.

Shaishav Mehta (FCA)

(M) 9727595108

S. D. Mehta & Co.

Chartered Accountants

“ACTIVE Form – IMPORTANT FOR ALL COMPANIES”

The Ministry of Corporate Affairs has issued a notification which comes into force w.e.f. 25^th February, 2019. It relates to filing of ACTIVE FORM [ INC-22A] The Salient features of this form are as follows:-

1. Active form (Active Company tagging identities and verification) has to be filed in Form No. INC - 22A.

2. The said form is to be filed on or before 25^th April, 2019.

3. The said form is to be filed by all the companies incorporated on or before 31^st December, 2017. Hence, it is applicable to all the companies whether its a Private Ltd. Company or Public Ltd. Company.

4. The said Active form basically contains information regarding registered office of the Company, No. of Directors, details of Statutory Auditors, details of Company Secretary, details of Managing Director and/or CEO and/or Whole time director.

5. With the above form, two photos are to be attached, out of which one photo shall show the external office building of the registered office of the company with presence of the Director/ Key Managerial Person (whose DSC is affixed in the form) with company’s name and address prominently appearing in the photograph.

         The other photograph showing inside office, also showing therein the Director / Key Managerial Person who has signed the form digitally.

6. At present fees for Active Form is NIL i.e. no fees are to be paid for filing Active form.

7. However, if Active form is not filed on or before 25^th April, 2019, then the said form can be filed after 25^th April, 2019 only on payment of Late filing fees of 10,000/-.
8. Please also note that unless Active form is filed, Company shall not be able to file forms like

         a. SH-07 (Change in Authorized Capital);

         b. PAS-03 (Change in Paid-up Capital);

         c. DIR-12 (Changes in Director except cessation);

         d. INC-22 (Change in Registered Office);

         e. INC-28 (Amalgamation, de-merger).

9. Companies which are under the process of striking off or under liquidation or dissolved or amalgamated are not required to file Active form.

10. Furnishing of false or inaccurate information or suppression of material information shall attract penalty and proceedings u/s 447, 448 and 449 of the Companies Act, 2013.

11. In view of the stringent requirement to file Active form, all concerned persons are advised to file the form on or before 25^th April.

-Dharit Mehta, FCA

(E) dharit@sdmca.in