02/02/2021
2020-21
Tax Proposals
Vision of a transparent, efficient tax system to promote investments and employment in the country with minimum burden on tax payers
1. Direct Taxes
Achievements:
Corporate tax rate slashed to make it among the lowest in the worldBurden of taxation on small taxpayers eased by increasing rebatesReturn filers almost doubled to 6.48 crore in 2020 from 31 crore in 2014Faceless Assessment and Faceless Appeal introduced
Relief to Senior Citizens:
Exemption from filing tax returns for senior citizens over 75 years of age and having only pension and interest income; tax to be deducted by paying bank
Reducing Disputes, Simplifying Settlement:
Time limit for re-opening cases reduced to 3 years from 6 yearsSerious tax evasion cases, with evidence of concealment of income of Rs. 50 lakh or more in a year, to be re-opened only up to 10 years, with approval of the Principal Chief CommissionerDispute Resolution Committee to be set up for taxpayers with taxable income up to Rs. 50 lakh and disputed income up to Rs. 10 lakhNational Faceless Income Tax Appellate Tribunal Centre to be establishedOver 1 lakh taxpayers opted to settle tax disputes of over Rs. 85,000 crore through Vivad Se Vishwas Scheme until 30th January 2021
Relaxation to NRIs:
Rules to be notified for removing hardships faced by NRIs regarding their foreign retirement accounts
Incentivising Digital Economy:
Limit of turnover for tax audit increased to 10 crore from Rs. 5 crore for entities carrying out 95% transactions digitally
Relief for Dividend:
Dividend payment to REIT/ InvIT exempt from TDSAdvance tax liability on dividend income only after declaration/ payment of dividendDeduction of tax on dividend income at lower treaty rate for Foreign Portfolio Investors
Attracting Foreign Investment for Infrastructure:
Infrastructure Debt Funds made eligible to raise funds by issuing Zero Coupon BondsRelaxation of some conditions relating to prohibition on private funding, restriction on commercial activities, and direct investment
Supporting ‘Housing for All’:
Additional deduction of interest, up to Rs. 1.5 lakh, for loan taken to buy an affordable house extended for loans taken till March 2022Tax holiday for Affordable Housing projects extended till March 2022Tax exemption allowed for notified Affordable Rental Housing Projects
Tax incentives to IFSC in GIFT City:
Tax holiday for capital gains from incomes of aircraft leasing companiesTax exemptions for aircraft lease rentals paid to foreign lessorsTax incentive for relocating foreign funds in the IFSCTax exemption to investment division of foreign banks located in IFSC
Ease of Filing Taxes:
Details of capital gains from listed securities, dividend income, interest from banks, etc. to be pre-filled in returns
Relief to Small Trusts:
Exemption limit of annual receipt revised from ₹1 crore to ₹5 crore for small charitable trusts running schools and hospitals
Labour Welfare:
Late deposit of employee‟s contribution by the employer not to be allowed as deduction to the employerEligibility for tax holiday claim for start-ups extended by one more yearCapital gains exemption for investment in start-ups extended till 31st March, 2022
2. Indirect Taxes
GST:
Measures taken till date:Nil return through SMSQuarterly return and monthly payment for small taxpayersElectronic invoice systemValidated input tax statementPre-filled editable GST returnStaggering of returns filingEnhancement of capacity of GSTN systemUse of deep analytics and AI to identify tax evaders
Custom Duty Rationalization:
Twin objectives: Promoting domestic manufacturing and helping India get onto global value chain and export better80 outdated exemptions already eliminatedRevised, distortion-free customs duty structure to be put in place from 1st October 2021 by reviewing more than 400 old exemptionsNew customs duty exemptions to have validity up to the 31st March following two years from its issue date
Electronic and Mobile Phone Industry:
Some exemptions on parts of chargers and sub-parts of mobiles withdrawn 16Duty on some parts of mobiles revised to 2.5% from ‘nil’ rate
Iron and Steel:
Customs duty reduced uniformly to 7.5% on semis, flat, and long products of non-alloy, alloy, and stainless steelsDuty on steel scrap exempted up to 31st March, 2022Anti-Dumping Duty (ADD) and Counter-Veiling Duty (CVD) revoked on certain steel productsDuty on copper scrap reduced from 5% to 2.5%
Textiles:
Basic Customs Duty (BCD) on caprolactam, nylon chips and nylon fiber & yarn reduced to 5%
Chemicals:
Calibrated customs duty rates on chemicals to encourage domestic value addition and to remove inversionsDuty on Naptha reduced to 2.5%
Gold and Silver:
Custom duty on gold and silver to be rationalized
Renewable Energy:Phased manufacturing plan for solar cells and solar panels to be notifiedDuty on solar invertors raised from 5% to 20%, and on solar lanterns from 5% to 15% to encourage domestic production
Capital Equipment:
Tunnel boring machine to now attract a customs duty of 7.5%; and its parts a duty of 2.5%Duty on certain auto parts increased to general rate of 15%
MSME Products:
Duty on steel screws and plastic builder wares increased to 15%Prawn feed to attract customs duty of 15% from earlier rate of 5%Exemption on import of duty-free items rationalized to incentivize exporters of garments, leather, and handicraft itemsExemption on imports of certain kind of leathers withdrawnCustoms duty on finished synthetic gem stones raised to encourage domestic processing
Agriculture Products:
Customs duty on cotton increased from nil to 10% and on raw silk and silk yarn from 10% to 15%.Withdrawal of end-use based concession on denatured ethyl alcoholAgriculture Infrastructure and Development Cess (AIDC) on a small number of items
Rationalization of Procedures and Easing of Compliance:
Turant Customs initiative, a Faceless, Paperless, and Contactless Customs measuresNew procedure for administration of Rules of Origin
