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February 6, 2020
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1.    No changes in income tax rates proposed for the A Y 2020-21.

2.    New Optional tax rates proposed for Individuals/ HUF for A Y 2021-22.

It is proposed to insert new section 115BAC with following tax rates:-

Total Income (Rs) Rate
Upto 2,50,000 Nil
From 2,50,001 to 5,00,000 5 per cent.
From 5,00,001 to 7,50,000 10 per cent.
From 7,50,001 to 10,00,000 15 per cent.
From 10,00,001 to 12,50,000 20 per cent.
From 12,50,001 to 15,00,000 25 per cent.
Above 15,00,000 30 per cent.

The following are condition/ key points in this section:-


total income of the individual or HUF is computed,—

without any exemption or deduction as mentioned below:-

    • House rent allowance 10(13A) and Leave travel concession 10(5)
    • Some of the allowance 10(14)
    • Allowances to MPs/MLAs u/s 10(17)
    • Allowance for income of minor 10(32)
    • Exemption for SEZ unit contained in section 10AA
    • Standard deduction, deduction for entertainment allowance and employment/professional tax as contained in section 16
    • Interest under section 24 in respect of self-occupied or vacant property referred to in sub-section (2) of section 23. (Loss under the head income
    • from house property for rented house shall not be allowed to be set off under any other head and would be allowed to be carried forward as per extant law)
    • Additional Depreciation
    • Deductions under section 32AD, 33AB, 33ABA
    • Various deduction for donation for or expenditure on scientific research
    • Deduction under section 35AD or section 35CCC
    • Deduction from family pension under clause (iia) of section 57
    • Any deduction under chapter VIA (like section 80C, 80CCC, 80CCD, 80D, 80DD, 80DDB, 80E, 80EE, 80EEA, 80EEB, 80G, 80GG, 80GGA, 80GGC, 80IA, 80-IAB, 80-IAC, 80-IB, 80-IBA, etc). However, deduction under sub-section (2) of section 80CCD (employer contribution on account of employee in notified pension scheme) and section 80JJAA (for new employment) can be claimed.
      • Following exemptions are as contained u/s 10(14) are allowable: –
    • Transport Allowance granted to a divyang employee to meet expenditure for the purpose of commuting between place of residence and place of duty
    • Conveyance Allowance granted to meet the expenditure on conveyance in performance of duties of an office;
    • Any Allowance granted to meet the cost of travel on tour or on transfer;
    • Daily Allowance to meet the ordinary daily charges incurred by an employee on account of absence from his normal place of duty.
  • 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 to in (i) above; or
  • by claiming the depreciation, if any, under section 32, except clause (iia) of sub-section (1) thereof, determined in such manner as may be prescribed; and
  • without any exemption or deduction for allowances or perquisite, by whatever name called, provided under any other law for the time being in force

Option shall be exercised

  • where such individual or HUF has no business income (in case of salaried person), along with the return of income to be furnished before due date and this can exercise at the option of the assessee for every assessment year; and
  • in any other case (having business income), on or before the due date of filing the return relevant to the assessment year commencing on or after 1st April, 2021 and such option once exercised shall apply to subsequent assessment years, however an assessee can once opt to exit this scheme and re-enter only if he has no business income for such previous year.

The option shall become invalid for a previous year or previous years, as the case may be, if the Individual or HUF fails to satisfy the conditions and other provisions of the Act shall apply.

3.    New optional tax rates for Co-operative societies (New Section 115BAD) (A Y 2021-22).

Concessional rate of tax in case of resident co-operative society have been proposed on similar lines with companies u/s 115BAA. In view of the above, it is proposed to insert a new section (115BAD) in the Act to provide that,-

  • a co-operative society resident in India shall have the option to pay tax at 22 per for assessment year 2021-22 onwards
  • The total income of the co-operative society is computed on similar lines as introduced for companies under section 115BAA.
  • Provisions relating to Alternate Minimum Tax (AMT) shall not apply to such co-operative society and no carry forward and set off of AMT credit is allowed.

4.    New optional tax rates for electricity generating companies (Section 115BAB) (A Y 2021-20).

Section 115BAB for reduced tax rates @ 15% was for new manufacturing domestic companies set up on or after 1st October, 2019, which commence manufacturing or production by 31st March, 2023. The option to pay tax at reduced rate is also proposed to be available to electricity generating companies by amending the definition of manufacturing under this section.

5.    Additional Benefits for Start-ups (Section 80-IAC) (A Y 2021-22).

It is proposed to amend section 80-IAC of the Act so as to provide that-

  • the deduction under the said section 80-IAC shall be available to an eligible start-up for a period of three consecutive assessment years out of ten years beginning from the year in which it is incorporated;
  • the deduction under the said section shall be available to an eligible start-up, if the total turnover of its business does not exceed 100 crore rupees in any of the previous years beginning from the year in which it is incorporated.

6.    Time limit for approval of affordable housing project (Section 80-IBA) (A Y 2021-22).

The gross total income of an assessee includes any profits and gains derived from the business of developing and building affordable housing projects, a deduction of an amount equal to one hundred per cent of the  profits and gains derived from such business is allowable under this section. The period of approval of the project by the competent authority is proposed to be extended to 31st March, 2021.

7.    Time limit for Sanction of Loan for affordable housing (Section 80EEA) (A Y 2021-22).

The deduction is aimed to incentivise first time buyers to invest in residential house property whose stamp duty does not exceed forty-five lakh rupees, to claim deduction up to one lakh fifty thousand rupees which is subject to certain conditions in addition to deduction u/s 24(b). In order to continue promoting purchase of affordable housing, the period of sanctioning of loan by the financial institution is proposed to be extended to 31st March, 2021 from earlier 31st March, 2020.

8.    Percentage of deviation in sale consideration and stamp duty value of Immovable Property (Section 43CA, 50C, 56) (A Y 2021-22).

In all the provisions where there is difference between the stamp duty value and sale consideration of immovable property is more than 5% of the sale consideration, then it has an tax impact on the buyer as well as the seller of the property. The deviation of 5% is proposed to revised to 10%.

9.    Non-filing of return by Non-Resident in respect of certain incomes (Section 115A) (A Y 2020-21).

In this budget dividend distribution tax u/s 115-O has been proposed to be abolished (along with section 10(34)) and consequently every receiver of such income is liable to pay tax on such dividend income. Now the companies paying dividend to non-resident or foreign companies are u/s 195 to deduct TDS at the rates in force (as per DTAA (10%/15%/20%) or rates mentioned in the First Schedule of Finance Act (20%/40%), as the case may be). Therefore, it is proposed to amend section 115A of the Act in order to provide that a non-resident, shall not be required to file return of income under sub-section (1) of section 139 of the Act if,-

  • his or its total income consists of only dividend or interest income as referred to in clause (a) of sub-section (1) of said section, or royalty or Fee for Technical Services income of the nature specified in clause (b) of sub-section (1) of section 115A; and
  • the TDS on such income has been deducted under the provisions of Chapter XVII-B of the Act at the rates which are not lower than the prescribed rates under sub-section (1) of section

10. Tax on ESOPs of Start- ups deferred (Section 140A, 156 and Section 191) (A Y 2021-22)

Currently ESOPs are taxed as perquisites under section 17(2) of the Act read with Rule 3(8)(iii) of the Rules. The taxation of ESOPs is split into two components:

  • Tax on perquisite as income from salary at the time of
  • Tax on income from capital gain at the time of

In order to ease the burden of payment of taxes by the employees of the eligible start-ups or TDS by the start-up employer, it is proposed that an eligible start- up as defined u/s 80-IAC, is required to deduct or pay, as the case may be, tax on such income within fourteen days —

  • after the expiry of 48 months from the end of the relevant assessment year; or
  • from the date of the sale of such specified security or sweat equity share by the assessee; or
  • from the date of which the assessee ceases to be the employee of the person;

whichever is the earliest, on the basis of rates in force of the financial year in which the said specified security or sweat equity share is allotted or transferred.

Similar amendments have been carried out in section 191 (for assessee to pay the tax direct in case of no TDS) and in section 156 (for notice of demand) and in section 140A (for calculating self-assessment).

11. TDS on payments for technical services reduced to 2% (Section 194J) (A Y 2021-22).

It is proposed to reduce rate for TDS in section 194J in case of fees for technical services (other than professional services) to two per cent from existing ten per cent. The TDS rate in other cases under section 194J would remain same at ten per cent.

12. Audits under section 44AB (Section 44AB) (A Y 2020-21).

The limit of turnover for the purpose audit for businesses is proposed to increase to 5 crore from current limit of 1 crore provided:-

  • aggregate of all receipts in cash during the previous year does not exceed 5% of such receipt; and
  • aggregate of all payments in cash during the previous year does not exceed 5% of such payment.

Now the issue arises what will happen in cases where receipts are greater than 2 crore and below 5 crore. So, in my opinion in those case where entire receipts/ expenditure are other than cash (or less than 5% in cash) then, the assessee would be required to maintain books of accounts without any requirement of audit. Further, in those cases there would not be any requirement to show profit of 6% of gross receipts.

13. Due date for filing return of income and provisions for pre-filling of income tax returns (A Y 2020-21).

The due date for filing return of income under sub-section (1) of section 139 is proposed to be amended by:-

  • providing 31st October of the assessment year (as against 30th September) as the due date for an assessee referred to in clause (a) of Explanation 2 of sub-section (1) of Section 139 of the Act;
  • removing the distinction between a working and a non-working partner of a firm with respect to the due date as mentioned in sub-clause (iii) of clause (a) of Explanation 2 of sub-section (1) of Section 139 of the Act.

To enable pre-filling of returns in case of persons having income from business or profession, it is required that the tax audit report may be furnished by the said assesses at least one month prior to the due date of filing of return of income. This requires amendments in all the sections of the Act which mandates filing of audit report along with the return of income or by the due date of filing of return of income. Thus, provisions of section 10, section 10A, section 12A, section 32AB, section 33AB, section 33ABA, section 35D, section 35E, section 44AB, section 44DA, section 50B, section 80-IA, section 80-IB, section 80JJAA, section 92F, section 115JB, section 115JC and section 115VW of the Act are proposed to be amended accordingly.

14. Extend the period of concessional rate of withholding tax and also to provide for the concessional rate to bonds listed in stock exchanges in IFSC. (Section 194LC) (1st April, 2020)

It is proposed to; –

  1. extend the period of said concessional rate of TDS of five per cent to 1st July, 2023 from 1st July, 2020;
  2. provide that the rate of TDS shall be four per cent on the interest payable to a non-resident, in respect of monies borrowed in foreign currency from a source outside India, by way of issue of any long term bond or RDB on or after 1st April, 2020 but before 1st July, 2023  and  which is listed only  on a  recognised  stock  exchange located  in any IFSC.

15. Extend the period of concessional rate of withholding tax and also to extend this concessional rate to municipal debt securities (Section 194LD) (1st April, 2020)

It has been proposed to amend section 194LD to,-

  1. extend the period of rate of TDS  of  five per cent  under  the said  section to  1st  July,  2023 from  the existing  1st July, 2020;
  2. provide that the concessional rate of TDS of five per cent under the said section shall also apply on the interest payable, on or after 1st April, 2020 but before 1st July, 2023, to a FII or QFI in respect of the investment made in municipal debt security.

16. Exclusion of interest paid or payable to PE of Non resident Bank (Section 94B) (A Y 2021-22)

It is proposed to amend section 94B of the Act so as to provide that provisions of interest limitation would not apply to interest paid in respect of a debt issued by a lender which is a PE of a non-resident, being a person engaged in the business of banking, in India.

17. Deduction to insurance companies for disallowed amount u/s 43B (A Y 2020-21)

Rule 5 of first schedule of the Act provides for computation of profits and gains of other insurance business. It is proposed to insert a proviso after clause (c) of the said rule 5 to provide that any sum payable by the assessee which is added back under section 43B in accordance with clause (a) of the said rule shall be allowed as deduction in computing the income under the rule in the previous year in which such sum is actually paid.

18. Exemption of certain income of wholly owned subsidiary of Abu Dhabi Investment Authority and Sovereign Wealth Fund (New Section 10(23FE)) (A Y 2021-22).

 19. Exemption in respect of certain income of Indian Strategic Petroleum Reserves Limited (New section 10(48C)) (A Y 2021-22).

 20. Modification in conditions for offshore funds’ exemption from “business connection (Section 9A) (A Y 2020-21)


21. TDS on interest payments by co-operative societies (Section 194A) (A Y 2021-22).

In current regime certain co-operative societies are not required to deduct tax from payment of interest. It is proposed to provide that a co-operative society referred to in clause (v) or clause (viia) of said sub-section (3) shall be liable to deduct income-tax in accordance with the provisions of sub-section (1), if-

  • the total sales, gross receipts or turnover of the co-operative society exceeds fifty crore rupees during the financial year immediately preceding the financial year in which the interest referred to in sub-section (1) is credited or paid; and
  • the amount of interest, or the aggregate of the amount of such interest, credited or paid, or is likely to be credited or paid, during the financial year is more than fifty thousand rupees in case of payee being a senior citizen and forty thousand rupees, in any other

22. TDS on E-Commerce transactions (New Section 194-O, section 197, 204 and 206AA) (A Y 2021-22).

New levy of TDS at the rate of 1% (5% if non Aadhaar or PAN provided) with the following key points:

  • The TDS is to be paid by e-commerce operator for sale of goods or provision of service facilitated by it through its digital or electronic facility or platform;
  • E-commerce operator is required to deduct tax at the time of credit of amount of sale or service or both to the account of e-commerce participant or at the time of payment thereof to such participant by any mode, whichever is earlier.
  • Any payment made by a purchaser of goods or recipient of services directly to an e-commerce participant will be treated to be paid by e-commerce operator and TDS liable on gross amount.
  • No TDS on sum credited or paid to an e-commerce participant (being an individual or HUF), if the gross amount of sales or services or both of such individual or HUF, through e-commerce operator, during the previous year does not exceed five lakh rupees and such e-commerce participant has furnished his Permanent Account Number (PAN) or Aadhaar number to the e-commerce
  • No further TDS on amounts on which TDS deducted under these provisions or exempted amount of Rs.5 Lakh.
  • “services” is defined to include fees for technical services and fees for professional services, as defined in section 194J.

23. TCS on payment under LSR of RBI, sale of goods and tour packages (Section 206C) (A Y 2021-22).

It is proposed to amend section 206C to collect TCS on following transactions:-

  • An authorised dealer receiving an amount or an aggregate of amounts of seven lakh rupees or more in a financial year for remittance out of India under the LRS of RBI (USD 250000 for private visit, tour, education, medical treatment etc.) shall collect TCS @ 5% (10% in case of no PAN/Aadhaar) from buyer being a person remitting such amount out of India.
  • A seller of an overseas tour program package who receives any amount from any buyer, being a person who purchases such package, TCS @ 5% (10% in case of no PAN/Aadhaar).

“overseas tour program package” means any tour package which offers visit to a country or countries or territory or territories outside India and includes expenses for travel or hotel stay or boarding or lodging or any other expenditure of similar nature or in relation thereto.

  • TCS @ 0.1% (1% in case of No PAN/Aadhaar) by seller of goods on consideration received from a buyer in a previous year in excess of 50 lakh rupees. Only by those sellers whose total sales, gross receipts or turnover from the business carried on by it exceed 10 crore rupees during the financial year immediately preceding the financial year.

The above provisions not to apply where:-

  1. buyer is liable to deduct tax at source under any other provision of the Act and he has deducted such amount;
  2. if the seller is liable to collect TCS under other provision of section 206C ;
  3. buyer is the Central Government, a State Government , an embassy, a High Commission, legation, commission, consulate, the trade representation of a foreign State, a local authority as defined in Explanation to clause (20) of section 10 or any other person notified by the Central Government in the Official Gazette for this purpose subject to such conditions as specified in that notification.

24. Combined upper limit on contribution by employer (Section 17(2)) (A Y 2021-22).

  • it is proposed to provide a combined upper limit of Rs.7.5 Lakh in respect of employer’s contribution in a year to NPS, superannuation fund and recognised provident fund and any excess contribution is proposed to be taxable.
  • it is also proposed that any annual accretion by way of interest, dividend or any other amount of similar nature during the previous year to the balance at the credit of the fund or scheme may be treated as perquisite to the extent it relates to the employer’s contribution (which related to amount in excess of Rs.7.50 Lakhs).


25. E-assessment scheme to include best judgment assessment u/s 144 (Section 143(3A)) (1st April 2020).

It is also proposed to include best judgment assessment u/s 144 of the section within the scope of e-assessment and CG may issue such directions upto 31st March, 2022.

26. Reference to DRP (Section 144C) (1st April, 2020).

The scope of section 144C is enlarged by widening the variation by Assessing officer from income or returned loss to any variation which is prejudicial to the interest of assessee. Further, Non-residents are also included in the definition of eligible assesses.

27. Provision of e-appeal (Section 250) (1st April, 2020).

The central government is empowered to notify an e-appeal scheme for disposal of appeal so as to impart greater efficiency, transparency and accountability and Eliminating the interface between the Commissioner (Appeals) and the appellant in the course of appellate proceedings to the extent technologically feasible. Such directions are to be issued on or before 31st March 2022.

28. Power curtailed for survey (section 133A) (1st April, 2020).

To prevent the possible misuse of power to survey under income tax It is proposed to substitute sub-section (6) of section 133A to provide that:-

  • in a case where the information has been received from the prescribed authority, no income-tax authority below the rank of Joint Director or Joint Commissioner, shall conduct any survey under the said section without prior approval of the Joint Director or the Joint Commissioner, as the case may be; and
  • in any other case, no income-tax authority below the rank of Commissioner or Director, shall conduct any survey under the said section without prior approval of the Commissioner or the Director, as the case may be.

29. Stay of demand by the Income Tax Appellate Tribunal (ITAT) (Section 254(2A)) (1st April, 2020).

  • It is proposed that ITAT may grant stay subject to the condition that assessee deposits not less than 20% of the amount of tax, interest, fee, penalty, or any other sum payable under the provisions of this Act, or furnish security of equal amount in respect thereof.
  • the total period of stay shall not exceed 365 days.

30. E-Penalty procedure (Section 274(2A) (1st April, 2020).

Similar to the e-assessment procedure, central government may notify e-scheme for the purposes of imposing penalty. Directions are to be issued on or before 31st March, 2022.


31. Modification of Residency provisions of Individual/ HUF (Section 6) (A Y 2021-22).

Instances have come to notice of government where period of 182 days specified in respect of an Indian citizen or person of Indian origin visiting India during the year, is being misused. Individuals, who are actually carrying out substantial economic activities from India, manage their period of stay in India, so as to remain a non-resident in perpetuity and not be required to declare their global income in India. Further, the current rules governing tax residence make it possible for high net worth individuals (HNWIs) and other individuals, who may be Indian citizen to not to be liable for tax anywhere in the world. In order to curb such situations it is proposed that-

  • the exception provided in clause (b) of Explanation 1 of sub-section (1) to section 6 for visiting India for a person of Indian origin or Indian citizen in that year be decreased to 120 days from existing 182
  • an individual or an HUF shall be said to be “not ordinarily resident” in India in a previous year, if the individual or the manager of the HUF has been a non-resident in India in seven out of ten previous years preceding that year. This new condition to replace the existing conditions in clauses (a) and (b) of sub-section (6) of section
  • an Indian citizen who is not liable to tax in any other country or territory shall be deemed to be resident in India.

It is clarified by the press release dated 02nd Feb, 2020, that in case of an Indian citizen who becomes deemed resident of India under the proposed provision, income earned outside India by him shall not be taxed in India unless it is derived from Indian business or profession.

32. Change in definition of work for TDS u/s 194C (Section 194C) (A Y 2021-20).

Definition of “work” under section 194C is proposed to provide that in a contract manufacturing, the raw material provided by the assessee or its associate shall fall within the purview of the ‘work’ under section 194C and TDS is deductible u/s 194C. Associate has the same meaning as assigned u/s 40A(2)(b) of the Act in relation to an assessee. This has been done to avoid misuse of the exception provided u/s 194C where application of this section was being avoided by supplying the material from the associate of the customer.

33. Penalty on fake entry/ deduction (New Section 271AAD) (A Y 2021-22).

This provision is proposed to be inserted to discourage and punish the use of bogus claim and penalise the persons involved in such bogus transactions. If it is found during any proceeding under the Act that in the books of accounts maintained by assessee, there is a

  • false entry or
  • any entry relevant for computation of total income of such person has been omitted to evade tax liability.

The penalty payable by such person shall be equal to the aggregate amount of false entries or omitted entry.

It is also propose to provide that any other person, who causes in any manner a person to make or cause to make a false entry or omits or causes to omit any entry, shall also pay by way of penalty a sum which is equal to the aggregate amounts of such false entries or omitted entry.

The false entries is proposed to include use or intention to use –

  • forged or falsified documents such as a false invoice or, in general, a false piece of documentary evidence; or
  • invoice in respect of supply or receipt of goods or services or both issued by the person or any other person without actual supply or receipt of such goods or services or both; or
  • invoice in respect of supply or receipt of goods or services or both to or from a person who do not exist.


34.  Key Amendment in Section 9 (Section 9).

  • Concept of Signification Economic Presence under section 9 of the Act is deferred to A Y 2022-23.
  • Definition of Royalty enlarged to include consideration for the sale, distribution or exhibition of cinematographic films (A Y 2021-22)

35. Removal of DDT and taxation in hands of recipient (Section 115-O and consequent amendment in other sections) (A Y 2021-22).

The DDT payable under section 115-O is proposed to be abolished with effect from 1st April, 2020 and consequently recipient of such income are liable to pay tax (section 10(34) abolished) and further payer of such income i.e. company distributing dividend are liable to deduct TDS u/s 194 (exemption threshold of Rs.5,000) and u/s 195, as the case may be. Further, section 115BBDA is also abolished. Moreover, new section 80M is proposed to be inserted to remove the cascading effect of tax on dividends by providing deduction of amount of dividend received by a domestic company from another domestic company as does not exceed the amount of dividend declared by the first domestic company.

Similar amendment is proposed under section 115R for specified companies and Mutual Funds which are liable to pay additional income-tax at the specified rate on any amount of income distributed by them to its unit holders.  Now the payee is liable to pay tax and payer is liable to deduct TDS.

Maximum deduction of 20% is allowable u/s 57 against income of dividend. Further, all sections where reference is made of section 115-O or are also proposed to be amended accordingly.

36. Fair market value in case of Land and/or building (Section 55) (A Y 2021-22)

It is proposed that the fair market value of a capital asset being land or building or both as on 1st April, 2001 shall not exceed its stamp duty value.

37. Amendment in Provisions related to Trust, institutions and deduction u/s 80G/80GGA. (A Y 2021-22).

  • Registration of trust institutions, funds, university, hospital etc and approval in the case of association, university, college, institution or company etc. existing and new will be allowable for a limited period of 5 years for the purpose of section 10(23C), 10(46), 12AA, section 35.
  • Further, an entity making fresh application for approval under clause (23C) of section 10, for registration under section 12AA, for approval under section 80G shall be provisionally approved or registered for three years on the basis of application without detailed enquiry even in the cases where activities of the entity are yet to begin and then it has to apply again for approval or registration which, if granted, shall be valid from the date of such provisional registration. The application of registration subsequent to provisional registration should be at least six months prior to expiry of provisional registration or within six months of start of activities, whichever is earlier.
  • Deduction under section 80G/ 80GGA to a donor shall be allowed only if a statement is furnished by the donee who shall be required to furnish a statement in respect of donations r\eceived and in the event of failure to do so, fee and penalty shall be levied.
  • Similar to section 80G of  the  Act,  deduction  of  cash  donation  under  section  80GGA  shall  be  restricted  to  Rs 2,000/- only.

38.  Changes in liability of Individual/ HUF to deduct TDS under various provisions (A Y 2021-22).

Changes in the section 194A, 194C, 194H, 194I, 194J and 206C are proposed to provide that monetary limit specified for individual and HUF under the above sections shall be substituted with rupees 1 crore in case of the business and Rs.50 lakh in case of the profession, as the case may be.

39. Provisions related to form 26AS (Section 285BB) (1st June, 2020).

Form 26AS is proposed to include information more than the transaction related to TDS/TCS. This section proposes to mandate the prescribed income-tax authority or the person authorised by such authority to upload in the registered account of the assessee a statement in such form and manner and setting forth such information, which is in the possession of an income-tax authority, and within such time, as may be prescribed.

40. Cost of acquisition and period of holding in case of segregated portfolio (Section 2(42A), 49) (A Y 2020-21).

SEBI has, vide circular SEBI/HO/IMD/DF2/CIR/P/2018/160 dated December 28, 2018, permitted creation of segregated portfolio of debt and money market instruments by Mutual Fund schemes. As per the SEBI circular, all the existing unit holders in the affected scheme as on the day of the credit event shall be allotted equal number of units in the segregated portfolio as held in the main portfolio. On segregation, the unit holders come to hold same number of units in two schemes –the main scheme and segregated scheme.

So, it is proposed to amend sub-section (42A) of section 2 of the Act to provide that in the case of a capital asset, being a unit or units in a segregated portfolio, referred to in sub-section (2AG) of section 49, there shall be included the period for which the original unit or units in the main portfolio were held by the assessee.

Further, a new sub-section (2AG) is proposed to be inserted in section 49 of the Act to provide that the cost of acquisition of a unit or units in the segregated portfolio shall be the amount which bears to the cost of acquisition of a unit or units held by the assessee in the total portfolio, the same proportion as the net asset value of the asset transferred to the segregated portfolio bears to the net asset value of the total portfolio immediately before the segregation of portfolios.

It is also proposed to insert another sub-section (2AH) in the said section to provide that the cost of the acquisition of the original units held by the unit holder in the main portfolio shall be deemed to have been reduced by the amount as so arrived at under the proposed sub-section (2AG).

The Explanation below these two new sub-sections, as proposed to be inserted, provide that for the purposes of sub-sections (2AG) and (2AH), the expressions “main portfolio”, “segregated portfolio” and “total portfolio” shall have the meaning respectively assigned to them in the said circular dated 28th December, 2018 issued by SEBI.

41. Aligning purpose of entering into Double Taxation Avoidance Agreements (DTAA) with Multilateral Instrument (MLI) by amendment of section 90 and 90A (A Y 2021-22).


42. No Dispute but Trust Scheme- Direct Tax

A scheme is proposed in which a taxpayer would be required to pay only the amount of the disputed taxes and will get complete waiver of interest and penalty provided he pays by 31st March, 2020.  Those who avail this scheme after 31st March, 2020 will have to pay some additional amount. The scheme will remain open till 30th June, 2020.

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




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