Pre Budget Recommendations of Income Tax for Union Budget, 2020
Pre Budget Recommendations of Income Tax for Union Budget, 2020
As we know that our union budget of 2020-2021 will be released on 1st February 2020 at 11.am by our Finance Minister. As per every year, this year also Institute of Chartered Accountants of India has submitted its Pre Budget Memorandum to the government.
The intention of these suggestions are as under:
1. Improve tax collection
2. Reduce or minimize litigations
3. Rationalization of provisions of direct tax laws
4. Removal of administrative and procedural difficulties relating to Direct Taxes
5. Check Tax Avoidance
Reduction in holding period in case of immovable property:
It is suggested that consequential amendments may be made in so as to enable the holding period of the new asset purchased to be reduced to 2 years from 3 years in case of land and/or building
Extending the scope of incomes which do not form part of total income:
Section 10(12A):-
It is suggested that the amendment as made in section 10(12A)thereby extending the benefit of exemption in case of partial withdrawal to non- employee subscribers as well.
Section 10(23C):-
It is suggested to exclude “Corpus Donation” from the requirement of mandatory application of income by such trusts/institutions just like section 11(1) to apply even their corpus donations to the day-to-day activities for getting the exemption
Section 10(32):-
At present income of minors included in the hands of parents is exempt to the extent of Rs.1, 500/- for each minor. It is suggested that this should be raised to at least Rs. 5,000/- for each minor child.
Section 37 – Corporate Social Responsibility Expenditure:
These expenses are all connected to social and charitable causes and not for any personal benefit or gain. It is, therefore, fair to allow the same as business expenditure.
Section 44AD – Presumptive Income Some Issues:
It is suggested that instead of subsection 44AD(6), the definition of “eligible business” be amended to exclude ‘specified professionals’, agency business and business in respect of which the earnings are in the form of commission or brokerage.
Section 44AD – Benefit of presumptive taxation to LLP
The benefit of section 44AD should also be made available to LLP.
Section 54EC:
The time limit for investment in specified bonds is presently 6 months from the date of transfer. It is suggested to amend section 54EC so that the time limit for investment in specified bonds may be allowed up to the due date of filing of ITR.
Section 55(2)(ac) – Clarification required to determine the cost of acquisition in case of merger/Demerger etc
We all know one of the major amendments by FA 2018 in Capital Gain Chapter i.e. 55(2)(ac) Grandfathering of Cost).
The expectation of Trade and Business from Budget 2020-21:
Travel Sector:
“We are also hopeful that the government will take cognizance and resolve challenges for the aviation industry which has already seen a tough year in 2019. For one, out of all the stakeholders in the aviation ecosystem, airlines operate with the most paper-thin margins.
E-commerce and Startup Sector:
“The expectation from the budget is to help the economy recover in most sectors that have seen a smaller growth over the last few years. Apart from this, we hope India lowers it’s import tax on commodities so that end consumers can have access to aspirational products for cheap prices, while at the same time drive credit subsidies for small business owners and boost manufacturing, which eventually will strengthen the economic growth”
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