Decoding Latest Amendments Of Income Tax
It is a known fact that the finance act 2020 that has been formulated by the Parliament is, for a large part, in light of the imminent economic instability due to the COVID-19 pandemic to help the Indian Economy re-stabilize. Naturally, it has brought about several changes for the business corporates. This has affected many businesses as many taxes have increased. It was authorized on 27 March 2020 and carried out under the name of the income tax act from 1 April 2020. Around 104 changes have been made, some by introducing new laws or others by withdrawing laws. These were made to boost India’s economy. People can see amendments in income tax rates for corporates for FY 20-21. Some amendments were especially for the people who are residents of India but do businesses outside and stay outside. Previously, the government had made it a matter, people who remain in India for 145 days, is expected to pay the taxes, but now days are reduced to 120 days. Some other main amendments are:
- The government has decided that the companies that were founded in after 1st October 2019 in the manufacture of products have to pay a concessional rate of 15 percent. It comes under section 115bab. But some businesses can benefit from the low corporate tax rate. The company can pay the tax by opting for this option but once listed under this clause; its name cannot be removed before that year.
- One of the good news for a startup is that they don’t have to pay their tax for the three consecutive years, if they receive profit in their ten-year start-up that should have begun between 1 April 2016 and 31 March 2021. However, its revenue should not exceed more than 1 billion. The turnover cap was 250 million earlier which covered the first seven years.
- Some rules are good for some people and not good for others. The dividend distribution tax is excluded from the transaction, but the beneficiary has to pay 10% tax on it and if the international deal is involved, it should be 20%. We know when we measure the company’s profits and then apply to the company’s income the dividend payment fee. And income has some taxes already. In 2016, an equalization levy was implemented to raise taxes from Indian non-residents.
- In attempts of boosting tax compliance, the amendments are providing the Indian Manufacturing Companies with incentives by way of tax refunds going up to 15 percent, excluding overheads like surcharge and cess.
These changes are made to help India expand its investments internationally. All the businesses demand good tax plans, so the government has worked on that. All amendments are important but the sec 115bab has involved the trading, in which most of the corporate sector is involved. There are many relaxations that Singapore business can get because of their tax system. Singapore people should contact the proper CA for help. Even the people of India can get benefited from these new amendments they just need proper guidance from their CA. India is changing for good, you just need to adapt according to the new changes.