All about the New Income Tax Regime - Budget 2020

BUDGET 2020 CAPSULE – 1

ALL ABOUT NEW INCOME TAX REGIME

1)  The new section 115BAC has been inserted to give effect to “New Income Tax Regime”.

2)  The said Income Tax regime is “OPTIONAL”.

3)  The option should be exercised on or before the due date of filing the Income Tax Returns.

5)  For the assesses having business income the option once exercised will be applicable for all subsequent assessment years. However, they are allowed to opt out of the option only once in any previous year other than the year in which it was exercised and thereafter, the person shall never be eligible to exercise option under this section. But when such assessee ceases to have business income he can again opt in for this scheme.

5)  For Individual/HUFs having no business Income are free to opt-in and opt-out of the scheme.

6)  The new scheme is applicable only for Individuals and HUF.

7)  Following Exemptions/deductions will not be available if new scheme is opted for.

a)  Leave Travel Concession (LTC) – u/s 10(5)

b)  House Rent Allowance u/s 10(13A)

c)   Special Allowance -10(14)

d)  Chapter VI-A Deductions ex – LIC, PF, PPF FD, Mutual Fund Investments, ELSS etc…

e)  Under Section10(17)

(i)       Daily allowance of of MP, MLAs and member of and any committee members threin.

(ii)       Any allowance received by MPs, MLAs under Member of Parliament (Constituency Allowance) Rules, 1986

(iii)      Any Constituency Allowance Received by MLA.

f)   Exemption with respect to Special Economic Zones (SEZ) u/s 10AA

g)  Standard Deduction of Rs. 50,000 and Professional Taxes(PT) paid u/s 16.

h)  Interest paid on House Property Loan Repayment (Self Occupied House Property) u/s 24b.

i)   Additional Depreciation with respect to new plant and machinery for manufacturers u/s 32(1)(iia).

j)   Additional Depreciation for Investment in Plant and Machinery in notified backward areas u/s 32AD.

k)   Deposit in Tea Development Account u/s 33AB.

l)   Deposit in Site Restoration Fund u/s 33ABA.

m) Payment made to National Laboratory or a University or an Indian Institute of Technology u/s 35(2AA).

n)  Expenditure on scientific research u/s 35(1)(ii), 35(1)(iia), 35(1)(iii).

o)  Expenditure on agricultural extension project 35CCC.

p)  Deduction in respect of expenditure on specified business u/s 35AD.

q)  Income from Family Pension u/s 57(iia).

r)   without set off of any loss carried forward or depreciation from any earlier assessment year, if such loss or depreciation is attributable to any of the deductions referred above.

s)   without set off of any loss under the head “Income from House Property” with any other head of income.

t)       without any exemption or deduction for allowances or perquisite, by whatever name called, provided under any other law for the time being in force.

Final Word:

Though the New Tax Regime looks attractive, one may end up with paying higher taxes considering the extent of exemptions/deductions forgone under New Tax Regime. However, the Computation need to be done on case to case basis and to adopt the best scheme which will minimise tax as well as creates some savings for an individual in long-run.

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Sanjay R Shetty

Chartered Accountant