New Income-Tax Regime!
It is worthwhile to look into the new tax policies and conditions put forward, in this new budget. Finance Minister, Nirmala Sitharaman, has modified the budget in a quest for simplifying the same by bringing in an optional income tax regime. This brings about a new dimension in the financial sector in India. However, it is yet to be seen how these new changes, brought forth by the new income tax regime, affect the taxpaying individuals as well as the overall financial sector of India. It is essential to know the nuances of this new budget and how it affects one’s income.
Facts involved in the new budget
Simplified Personal Income!
A simplified, yet optional personal income tax regime has been introduced via the new budget. This was introduced on income up to 15 Lakh Rupees. Taxpayers can opt for this new scheme; however, they should forego all earlier tax exemptions and deductions along with certain losses.
Dividend Distribution Tax
One of the main highlights of the new tax regime is that Dividend Distribution Tax got abolished: Recipient taxpayers, taxed with dividends that are available in various slabs. The Tax Deducted at Source (TDS) at about 10% is applicable for the dividend paid to an individual exceeding 15,000 Rupees, during fiscal. This brings in benefit to small taxpayers; tax at lower slab rates according to applicable DDT rates.
Additional Tax Liability for high-net individuals
According to the new budget, the Finance Ministry gives and takes away the contribution, various employers give to Provident Fund, National Pension System, and Superannuation fund that exceeds an aggregate of about 7.5 lakhs per year: to be taxed as salary. This leads to additional tax-liability for high-net individuals.
ESOPs
The tax payments on ESOPs (Employee Stock Ownership or Employee Share Ownership), which is received by employees of eligible startups are to be stopped. Such tax is now slotted to be paid after every 5 years. This process improves cash-flow for various employees. These benefits are for employees of start-up firms.
Relief to home-buyers
The new budget has brought forward a much-needed relief to homebuyers. No adjustments are allowed for sale considerations. Transfer of immovable properties such as homes or land is made only where the variation between stamp duty value and sale-consideration is not more than 10%. This reduces the hardship to taxpayers in genuine real-estate transactions.
Vivaad Se Vishwas
A new scheme known as Vivaad Se Vishwas allows taxpayers to pay the amount of disputed tax on or before March 31, 2020. Under dispute, tax can be paid by June 30, 2020, with some additional amount, as well.
Information available with tax-authorities
The new regime enables taxpayers to reduce litigation by reconciling the details reported in their tax-return files; the information is already available with tax authorities. Tax to be collected will increase to about 10%, with unfurnished PAN or Aadhaar Card.
Wrapping Up
A new optional income-tax regime brought forward by the latest budget as well as various other aforementioned facts is poised to change the dimension of the Indian economy and the tax sector. This helps in saving tax, which in turn will be beneficial for one’s income.