BUDGET 2020 ANALYSIS by CA VIVEK GABA

CA VIVEK GABA ANALYSIS OF BUDGET 2020 TAXATION
BUDGET 2020
DETAILED ANALYSIS
Let’s MAKE IT EASY WITH LOTS OF EXAMPLES
Topics to be Covered: (Every amendment with Example)
1) Analysis of New Slab rate & which one is beneficial
2) Amendment in CDT and effect of removal CDT
3) Amendment in section 50C + 43CA + 56(2)(x)
4) Amendment in TDS
5) Amendment in Residential Status
6) Amendment in Return of income
7) Amendment in tax Audit u/s 44AB
8) Amendment for Start up company
9) Amendment in section 80EEA
10) Many Misc. amendments
Source: Finance Bill, Memorandum, FM Speech

Analysis by :
CA VIVEK GABA
IVIDYA ACADEMY & EXPERT CA CLASSES - 7703880232 Page 1
Proposed Amendments via Finance Bill, 2019

Analysis by CA VIVEK GABA
(Not relevant for CA/CS/CMA (May/June & Nov/Dec 2020 Exams)
1) Personal Income Tax Rates of Tax
Proposed Tax regime for the INDIVIDUALS AND HUF (OPTIONAL for the assessee)
Proposal to introduce Section 115BAC

Proposed rate of tax:
There is NO CHANGE in income tax slab.
Income Slabs (INR) Existing tax rate* Proposed tax rate*
(OPTION – 1) (OPTION – 2)
AY 21-22 AY 21-22
Less than 250,000 0% 0%
From 250,000 to 500,000 5% 5%
From 500,000 to 7,50,000 20% 10%
From 7,50,000 to 10,00,000 20% 15%
From 10,00,000 to 12,50,000 30% 20%
From 12,50,000 to 15,00,000 30% 25%
More than 15,00,000 30% 30%
Note 1:
Plus surcharge @ 10%/ 15%/ 25%/ 37% (as the case may be) and health and education cess @
4% (NO CHANGE)
Note 2:
Senior Citizen Exemption limit is 3 lakh and super senior citizen exemption limit is 5 lakh
(only if assessee avail existing exemption limit)
Note 3:
Reabte u/s 87A is available in Both cases if TI upto Rs. 5 lakh.
Key Points:
1) The option shall be exercised for every previous year where the individual or the HUF has
no business income, and in other cases (i.e. when the Individual or the HUF has business
income), the option once exercised for a previous year shall be valid for that previous year
and all subsequent years.

2) The option shall become invalid for a previous year or previous years, as the case may be, if the
Individual or the HUF fails to satisfy the conditions and other provisions of the Act.
3) The conditions for concessional rate shall be that the total income is computed:
a) without any exemption or deduction under the provisions of clause (5) or clause (13A) or
prescribed under clause (14) (other than those as may be prescribed for this purpose) or
clause (17) or clause (32) of section 10 or section 10AA or section 16 or clause (b) of section
24 [in respect of property referred to in sub-section (2) of section 23] or clause (iia) of sub-
section (1) of section 32 or section 32AD or section 33AB or section 33ABA or sub-clause (ii)
or sub-clause (iia) or sub-clause (iii) of sub-section (1) or sub-section (2AA) of section 35 or
section 35AD or section 35CCC or clause (iia) of section 57 or under any provisions of
Chapter VI-A other than the provisions of sub-section (2) of section 80CCD or section
80JJAA;
b) without set off of any loss,-

i) carried forward or depreciation from any earlier assessment year, if such loss or
depreciation is attributable to any of the deductions referred to in (a) above; or
ii) under the head house property with any other head of income;
c) 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
d) without any exemption or deduction for allowances or perquisite, by whatever name

called, provided under any other law for the time being in force.
4) the concessional rate shall not apply unless option is exercised by the individual or HUF in
the form and manner as may be prescribed,-
a) where such individual or HUF has no business income, along with the return of income
to be furnished under section 139(1) of the Act; and
b) in any other case, on or before the due date specified under section 139(1) of the Act for
furnishing the return of income for any previous year relevant to the assessment year
commencing on or after 1st April 2021 and such option once exercised shall apply to
subsequent assessment years.
5) The option can be withdrawn only once where it was exercised by the individual or HUF
having business income for a previous year other than the year in which it was exercised and
thereafter, the individual or HUF shall never be eligible to exercise option under this
section, except where such individual or HUF ceases to have any business income.
6) Section 115JC is proposed to be amended such that the provisions relating to AMT shall not
apply to such individual or HUF having business income.
7) Section 115JD is proposed to be amended to provide that the provisions relating to carry
forward and set off of AMT credit, if any, shall not apply to such individual or HUF having
business income.

The condition mentioned above under 3 (a) implies that the individual or HUF opting for taxation
under section 115BAC shall not be entitled to the following exemptions/ deductions:
a) Leave travel concession as contained in clause (5) of section 10;
b) House rent allowance as contained in clause (13A) of section 10;
c) Some of the allowance as contained in clause (14) of section 10;
d) Allowances to MPs/MLAs as contained in clause (17) of section 10;
e) Allowance for income of minor as contained in clause (32) of section 10;
f) Exemption for SEZ unit contained in section 10AA;
g) Standard deduction, deduction for entertainment allowance and employment/professional tax
as contained in section 16;
h) 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);
i) Additional deprecation under clause (iia) of sub-section (1) of section 32;
j) Deductions under section 32AD, 33AB, 33ABA;
k) Various deduction for donation for or expenditure on scientific research contained in sub-
clause (ii) or sub-clause (iia) or sub-clause (iii) of sub-section (1) or sub-section (2AA) of section
35;
l) Deduction under section 35AD or section 35CCC;
m) Deduction from family pension under clause (iia) of section 57;
n) 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.
Effect of the proposed amendment: (With Examples)

Example 1:
Total Income 15,00,000 (Assume NO INVESTMENT)
Option 1: (Existing Rates)
Upto 2,50,000 = Nil Tax

Next 2,50,000 = 12500 (2,50,000 x 5%)
Next 5,00,000 = 1,00,000 (5,00,000 x 20%)
Next 5,00,000 = 1,50,0000 (5,00,000 x 30%)

Total Tax = 2,62,500

+ H&EC @ 4% = 10,500
Final Tax = 2,73,000
OPTION – 2 (New Tax Regime Section 115BAC)

First 2,50,000 = Nil
Next 2,50,000 = 12,500
Next 2,50,000 = 25,000
Next 2,50,000 = 37,500
Next 2,50,000 = 50,000
Next 2,50,000 = 62,500
+ H&EC @ 4% = 7,500

TAX SAVING = 2,73,000 – 1,95,000 = 78,000
Example 2:
Gross Total Income 15,00,000
Deduction u/s 80C = 1,50,000
Deduction u/s 80D = 25,000
Deduction u/s 24 = 2,00,000 (SOH)
TOTAL INCOME = 11,25,000
Option 1: (Exisitng Rates)

Next 2,50,000 = 12500 (2,50,000 x 5%)
Next 5,00,000 = 1,00,000 ( 5,00,000 x 20%)
Next 1,25,000 = 37,500 ( 1,25,000 x 30%)
+ H&EC @ 4% = 6,000


Next 2,50,000 = 12,500
Next 2,50,000 = 25,000
Next 2,50,000 = 37,500
Next 2,50,000 = 50,000
Next 2,50,000 = 62,500
+ H&EC @ 4% = 7,500
TAX LOSS = 1,95,000 – 1,56,000 = 39,000
Example 3:
Deduction u/s 24 = 2,00,000 (SOH)
Standard Deduction u/s 16(ia) = 50,000
OPTION 1: (Exisitng Rates)

Next 2,50,000 = 12500 (2,50,000 x 5%)
Next 5,00,000 = 1,00,000 ( 5,00,000 x 20%)
Next 75,000 = 22,500 ( 75,000 x 30%)
+ H&EC @ 4% = 5,400


Next 2,50,000 = 12,500
Next 2,50,000 = 25,000
Next 2,50,000 = 37,500
Next 2,50,000 = 50,000
Next 2,50,000 = 62,500
+ H&EC @ 4% = 7,500
TAX LOSS = 1,95,000 – 1,40,400 = 54,600
Example 4:
Standard Deduction u/s 16(ia) = 50,000
Option 1: (Exisitng Rates)
Next 2,50,000 = 12500 (2,50,000 x 5%)
Total Tax = 12,500
Rebate u/s 87A = 12,500
Final Tax = Nil


Next 2,50,000 = 12,500
Next 2,25,000 = 22,500
Total Tax = 35,000
+ H&EC @ 4% = 1,400
Final Tax = 36,400
TAX LOSS = 36,400 – NIL = 36,400

NOTE:
There can be more tax loss also to the assesse under the new tax regime. In the above examples, I
have not considered HRA, LTC, brought forward tax losses and other benefits of section 80 and
section 35 etc.
MY OPINION:
FOR BUSINESSMAN, the new scheme is NOT BENEFCIAL since there are MANY
CONDITIONS which needs to be complied by the assessee.
However, tax saving/ tax loss may change on CASE TO CASE basis. An assessee needs to
compare the tax liability under both the cases so as to determine which tax regime is
beneficial for him. In a case where, no investment is made by the assesse, new tax regime
would be beneficial for him.
2) Tax rates for Companies

Particulars Tax rate
Company having T.O or GR upto 400 cr in the P.Y 17-18 25% + 7% or 12%
Surcharge as the
case may be.
Company having turnover or gross receipt of more than Rs. 400 crore 30%+ 7% or 12%
in the previous year 2017-18 Surcharge as the
case may be.
Company opting for section 115BAA (Subject to Conditions) 22% + 10%
Surcharge
Company opting for section 115BAB including companies engaged 15% + 10%
in the business of generation of electricity (subject to conditions) Surcharge
Any other company (i.e. Foreign Company) 40%+ 2% or 5%
Surcharge as the
case may be.
MAT 15% plus surcharge

3) Tax Rates in case of Co–operative Society

Total Income Tax rates
Total Income upto Rs. 10,000 10%
More than 10,000 upto 20,000 20%
More than 20,000 30%
Notes
1) Surcharge and H&EC will be same as per the existing tax provisions.
2) Proposed Amendment via Finance Bill 2020: Insertion of Section 115BAD i.e. Tax on
income of certain resident co-operative societies.
Section 115BAD proposed to provide an option to a resident co-operative society an option to

pay tax at 22% for assessment year 2021-22 onwards in respect of its total income subject to
certain conditions. If it fails to satisfy the conditions in any previous year, the OPTION shall
become invalid and other provisions of the Act shall apply;
1) The condition for concessional rate shall be that the total income is computed,:
a) without any deduction under section 10AA or section 32(1)(iia) or section 32AD or
section 33AB or section 33ABA or sub-clause (ii) or sub-clause (iia) or sub-clause (iii) of
sub-section (1) or sub-section (2AA) of section 35 or section 35AD or section 35CCC or
under any provisions of Chapter VI-A;
b) 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 (a)
above; and
c) 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;
2) the concessional rate shall not apply unless option is exercised by the co-operative
society in the prescribed manner on or before the due date specified under section 139(1) for
furnishing the returns of income for any previous year relevant to the assessment year
commencing on or after 1st April, 2021 and such option once exercised shall apply to
subsequent assessment years;
3) the option so exercised cannot be withdrawn;
4) The surcharge applicable to such co-operative society shall be 10%
5) It is further proposed to amend section 115JC to provide that the provisions relating to
Alternate Minimum Tax (AMT) shall not apply to such co-operative society.

In other words, an option is proposed for the resident cooperative society to be taxed at 22%
plus 10% surcharge and 4% cess with no exemption/deductions. Further, it is proposed to
exempt these co-operative societies from Alternative Minimum Tax (AMT).
4) CORPORATE DIVIDEND TAX/DIVIDEND DISTRIBUTION TAX

It is proposed to amend section 115 – O, section 115 – R, section 115BBDA, section 10(34) and
section 10(35) such that these sections would not have effect from 1st April 2020.
PROPOSED LAW:
Section 115-O provides that, in addition to the income-tax chargeable in respect of the total income
of a domestic company, any amount declared, distributed or paid by way of dividends shall be
charged to additional income-tax at the rate of 15%. The tax so paid by the company (called DDT) is
treated as the final payment of tax in respect of the amount declared, distributed or paid by way of
dividend. Such dividend referred in section 115-O is exempt in the hands of shareholders under
section 10(34).
The incidence of tax is, thus, on the payer company and not recipient. The dividend is income in the
hands of the shareholders and not company. The incidence of the tax should therefore, be on the
recipient. Moreover, the present provisions levy tax at a flat rate on the distributed profits
irrespective of the marginal rate at which the recipient is otherwise taxed. The provisions are hence,
considered, iniquitous and regressive. The present system of taxation of dividend in the hands of
company was reintroduced by the Finance Act, 2003 (with effect from AY 2004-05) since it was
easier to collect tax at single point
In view of above, it is proposed to make amendments such that dividend is taxable in the hands of
shareholders at the applicable rate and the domestic company is not required to pay any DDT. It is
also proposed to provide that the deduction for expense under section 57 shall be maximum 20% of
the dividend. Therefore, it is proposed to-
(i) amend section 115-O to provide that dividend declared, distributed or paid after 1 st April, 2003,
but on or before 31st March, 2020 shall be covered under the provision of this section.
(ii) amend section 10(34) to provide that the provision of this clause shall not apply to any income,
by way of dividend, received on or after 1st April, 2020.
(iii) insert new section 80M as it existed before it removal by the Finance Act, 2003 to remove the
cascading affect, with a change that set off will be allowed only for dividend distributed by the
company one month prior to the due date of filing of return, in place of due date of filing return
earlier.
(iv) amend section 115BBDA which taxes dividend income in excess of Rs 10 lakh in the hands of
shareholder at 10%, to only dividend declared, distributed or paid by a domestic company on or
before the 31st day of March, 2020.
(v) amend section 57 to provide that no deduction shall be allowed from dividend income, other
than deduction on account of interest expense and in any previous year such deduction shall not

exceed 20% of the dividend income included in the total income for that year without deduction
under section 57.
(vi) amend section 194 to include dividend for tax deduction. At the same time the rates of 10% is
proposed to be prescribed and threshold is proposed to be increased from Rs 2,500 to Rs 5,000
for dividend paid other than cash. Further, at present the mode of payment is given as “an
account payee cheque or warrant”. It is proposed to change this to any mode.
(vii) amend section 195 to delete exemption provided to dividend referred to in section 115-O.
(viii) amend section 196C to remove exclusion provided to dividend under section 115-O. It is also
proposed to substitute “in cash or by the issue of a cheque or draft or by any other mode” with
“by any mode”.
(ix) amend section 196D to remove exclusion provided to dividend under section 115-O. It is also
proposed to substitute “in cash or by the issue of a cheque or draft or by any other mode” with
“by any mode”.
Amendments at above clause will take effect from 1st April, 2021 and will, accordingly, apply in
relation to the assessment year 2021-22 and subsequent assessment years. Amendments at clause
(xiii) to (xix) will take effect from 1 st April, 2020.
Example of AMENDMENT
ABC Ltd. distributes dividend of Rs 5,00,000 each to its shareholder. The detail of the shareholder is
given below:
Shareholder 1 Raman Individual No other income
Shareholder 2 Rashi Individual Other income: Rs 15 lakh
Shareholder 3 LMN Ltd. Company Not relevant
The taxation under the current regime and proposed regime is illustrated below:
1. Raman
Current Provision Proposed Provision

ABC Ltd. to pay CDT/ DDT on the dividend No CDT/ DDT payable by ABC Ltd.#
distributed to Raman.
CDT payable by ABC Ltd.:
5,00,000 x 20.555% = 1,02,775
In the hands of Raman: Dividend exempt In the hands of Raman: Considering that there
under section 10(34) is no other income apart from Dividend in the
hands of Raman, no tax is payable on
dividend of Rs. 5,00,000 (due to exemption
and rebate).

2. Rashi

ABC Ltd. to pay CDT/ DDT on the dividend No CDT/ DDT payable by ABC Ltd. #
distributed to Rashi.
5,00,000 x 20.555% = 1,02,775
In the hands of Rashi: Dividend exempt under In the hands of Rashi:

section 10(34) Tax payable: 5,00,000 x 31.2% = 1,56,000
(Taxed at 30% since other income of Rashi is
15,00,000 and the highest slab tax rate is 30%)
3. LMN Ltd

ABC Ltd. to pay CDT/ DDT on the dividend No CDT/ DDT payable by ABC Ltd. #
distributed to LMN Ltd.
5,00,000 x 20.555% = 1,02,775
In the hands of LMN Ltd.: Dividend exempt In the hands of LMN:

under section 10(34) Tax payable: 5,00,000 x 31.2% = 1,56,000
(Taxed at flat rate 30%)
#
ABC Ltd shall comply with the TDS provisions and deduct tax at source.
5) Focus on real estate sector:
Increase in safe harbour limit of 5% under section 43CA, 50C

and 56 to 10%
Section 43CA provides that where the consideration declared to be received or accruing as a result
of the transfer of land or building or both, is less than the value adopted or assessed or assessable
by any authority of a State Government (i.e. “stamp valuation authority”) for the purpose of payment
of stamp duty in respect of such transfer, the value so adopted or assessed or assessable shall for
the purpose of computing profits and gains from transfer of such assets, be deemed to be the full
value of consideration. It also provides that where the value adopted or assessed or assessable by
the authority for the purpose of payment of stamp duty does not exceed 105% of the
consideration received or accruing as a result of the transfer, the consideration so received or
accruing as a result of the transfer shall, for the purposes of computing profits and gains from
transfer of such asset, be deemed to be the full value of the consideration.
Section 50C provides that where the consideration declared to be received or accruing as a result
of the transfer of land or building or both, is less than the value adopted or assessed or assessable
by stamp valuation authority for the purpose of payment of stamp duty in respect of such transfer,
the value so adopted or assessed or assessable shall be deemed as full value of the consideration
and capital gains shall be computed on the basis of such consideration. It also provides that where
the value adopted or assessed or assessable by the stamp valuation authority does not exceed

105% of the consideration received or accruing as a result of the transfer, the consideration so
received or accruing shall be deemed to be the full value of the consideration.
Section 56(2)(x) provides that where any person receives, in any previous year, from any person or
persons on or after 1st April 2017, any immovable property, for a consideration which is less than the
stamp duty value of the property by an amount exceeding Rs. 50,000, the stamp duty value of such
property as exceeds such consideration shall be taxed under the head “income from other sources”.
It also provides that where the assessee receives any immovable property for a consideration and
the stamp duty value of such property exceeds 5% of the consideration or Rs. 50,000,
whichever is higher, the stamp duty value of such property as exceeds such consideration shall be
charged to tax under the head “Income from other sources”.
Thus, section 43CA, 50C and 56 currently provide safe harbour of 5%. It is proposed to increase
the limit to 10%. This amendment will take effect from 1st April, 2021 and will, accordingly, apply in
relation to the assessment year 2021-22 and subsequent assessment years.
EXAMPLE OF AMENDMENT:
Tamanna sold a building for Rs. 50,00,000. The stamp duty value of such building is
Case 1: Rs. 53,50,000
Case 1: Rs. 55,50,000
Comparision between current and proposed provisions
Case 1: where stamp duty value is Rs. 53,50,000

Sales Consideration: 50,00,000 Sales Consideration: 50,00,000
SDV: 53,50,000 SDV: 53,50,000
Rs. 53,50,000 deemed as sales consideration Rs. 50,00,000 deemed as sales consideration
for the purpose of tax implications under for the purpose of tax implications under
section 50C/ 43CA/ 56(2)(x) since SDV is more section 50C/ 43CA/ 56(2)(x) since SDV is not
than 105% of the sale consideration. more than 110% of the sale consideration.
Case 2: where stamp duty value is Rs. 55,50,000

Sales Consideration: 50,00,000 Sales Consideration: 50,00,000
SDV: 55,50,000 SDV: 55,50,000
Rs. 55,50,000 deemed as sales consideration Rs. 55,50,000 deemed as sales consideration
for the purpose of tax implications under for the purpose of tax implications under
section 50C/ 43CA/ 56(2)(x) since SDV is more section 50C/ 43CA/ 56(2)(x) since SDV is more
than 105% of the sale consideration. than 110% of the sale consideration.

6) Rationalisation the provisions of TAX AUDIT

Section 44AB provides that every person carrying on business is required to get his accounts
audited, if his total sales, turnover or gross receipts, in business exceed or exceeds Rs. 1 crore in
any previous year. In case of a person carrying on profession he is required to get his accounts
audited, if his gross receipt in profession exceeds Rs 50 lakh in any previous year.
To reduce compliance burden on small and medium enterprises, it is proposed to increase the
threshold limit for a person carrying on business from Rs 1 crore to Rs 5 crore in cases where,-
a) aggregate of all receipts in cash during the previous year does not exceed 5% of such
receipt; AND
b) aggregate of all payments in cash during the previous year does not exceed 5% of such
payment.
Example of AMENDMENT:
Gross turnover of Turmeric Ltd is Rs. 4,50,00,000

The breakup of cash and non-cash receipt and payment made by the company during the financial
year is as follows:
Particulars Cash Other than cash
Case 1
Receipts 3% of total receipts 97% of total receipts
Payments 5% of total payments 95% of total payments
Case 2
Case 3
Receipts 3.5% of total receipts 96.5% of total receipts
Case 4
Under the current regime, it is compulsory for the Turmeric Ltd to get its account audited.
Lets check whether Turmeric Ltd needs to get its account audited under the proposed regime:
Particulars Cash Other than cash Requirement of audit

Case 1
Receipts 3% of total receipts 97% of total receipts Not required
Case 2
Receipts 7% of total receipts 93% of total receipts Required
Case 3
Receipts 3.5% of total receipts 96.5% of total receipts Required
Case 4

Receipts 17% of total receipts 83% of total receipts Required

Impact on TDS section:

The amendment relating to extending threshold for getting books of accounts audited will have
consequential effect on TDS/TCS provisions contained in sections 194A, 194C, 194H, 194I, 194J
and 206C as these provisions fasten liability of TDS/TCS on certain categories of person, if the
gross receipt or turnover from the business or profession carried on by them exceed the monetary
limit specified in clause (a) or clause (b) of section 44AB.
It is proposed to amend these sections so that reference to the monetary limit specified in clause (a)
or clause (b) of section 44AB of the Act is substituted with Rs 1 crore in case of the business or
Rs 50 lakh in case of the profession, as the case may be.
Mr. Abhinav, engaged in business activity. The turnover during the financial year 2020-21 is Rs 3
crore and 97% payment and receipt is made via mode other than cash. During the financial year,
there is no obligation to get tax audit done.
He paid professional amounting Rs 2 lakh during the financial year to Mr. Gagan.
Under the proposed amendment, Abhinav shall deduct tax at source under section 194J of the Act
on such professional fee paid to Gagan since turnover exceed Rs. 1 crore during the financial year.
7) Due date of filing return of income

The due date for filing return of income under section 139(1) is proposed to be amended by:
a) 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 Section 139(1);
b) removing distinction between working and non-working partner of firm with respect to the
due date as mentioned in sub-clause (iii) of clause (a) of Explanation 2 of section 139(1).
Assessee Current Provisions Proposed provisions

Company 30th September of AY 30th October of AY
Firm required to audit 30th September of AY 30th October of AY
A working partner of a firm 30th September of AY 30th October of AY
whose accounts are required to
be audited.

8) Extending time limit for sanctioning of loan for affordable

housing for availing deduction under section 80EEA
Section 80EEA provides deduction in respect of interest on loan taken from any financial institution
for acquisition of an affordable residential house property. The deduction allowed is up to Rs.
1,50,000 subject to certain conditions. One of the conditions is that loan has been sanctioned by the
financial institution during the period from 1st April, 2019 to 31st March, 2020.
The aim is to incentivise first time buyers to invest in residential house property whose stamp duty
does not exceed Rs. 45 lakh. To promote purchase of affordable housing, the period of sanctioning
of loan by the financial institution is proposed to be extended to 31st March, 2021.
This amendment will take effect from 1st April 2021 and accordingly, apply in relation to the
assessment year 2021-22 and subsequent assessment years.
9) Section 6: Modification of residency provisions

Section 6 is proposed to be amended such that
a) the exception provided in clause (b) of Explanation 1 of section 6(1) for visiting India in
that year be DECREASED TO 120 DAYS FROM EXISTING 182 DAYS.
b) 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 7 out of 10
previous years preceding that year. This new condition to replace the existing conditions
in clauses (a) and (b) of section 6(6).
c) an Indian citizen who is not liable to tax in any other country or territory shall be deemed
to be resident in India.
(Income earned outside India by him shall not be taxed in India: Clarification via press release
issued by Ministry of Finance on 2nd Feb, 2020)
This amendment will take effect from 1st April, 2021 and will, accordingly, apply in relation to the
1. Mr. Oberoi, an Indian citizen staying in London visited India on 22 November 2020 and stays in
till 7th April 2021. Determine his residential status during the financial year 2020-21.
No. of days Mr. Oberoi stays in India during the financial year 2020-21
November 9 days
December 31 days
January 31 days
February 28 days
March 31 days
Total days 130 days


Mr. Oberoi is not a resident in India since he Mr. Oberoi is a resident in India since he
stayed for less than 182 days during the stayed for more than 120 days during the
financial year 2020-21 i.e. assessment year financial year 2020-21 i.e. assessment year
2021-22 2021-22
2. Viraaj Singhania, a citizen of India stayed in China, Japan, United Kingdom, Singapore, India,
Malaysia and United States during the financial year 2020-21. He stayed in India for the period
of 50 days during the financial year 2020-21. He is not a resident of any country in which he
stayed during the financial year 2020-21. Examine his tax residential status in India.

Viraaj Singhania is not a resident in India Viraaj Singhania is a resident in India since he
since he stayed in India only for 50 days. is not resident of any country during the
financial year 2020-21.
However, as clarified by the Ministry of Finance
via Press Release the income earned outside
India by Viraaj Singhania shall not be taxed in
India unless it is derived from an Indian
business or profession.
10) Rationalization of provisions of start-ups/ Tax holiday for

the Start-ups
Section 80-IAC provides deduction of an amount equal to 100% of the profits and gains derived
from an eligible business by an eligible start-up for 3 consecutive assessment years out of 7
years, at the option of the assessee, subject to the condition that the eligible start-up is incorporated
on or after 1st April, 2016 but before 1st April, 2021 and the total turnover of its business does not
exceed Rs. 25 crore.
To rationalise the provisions relating to start-ups, it is proposed to amend section 80-IAC of the
Act so as to provide that-
(i) the deduction shall be available to an eligible start-up for 3 consecutive assessment years out
of 10 years beginning from the year in which it is incorporated;
(ii) the deduction shall be available to an eligible start-up, if the total turnover of its business does
not exceed Rs 100 crore in any of the previous years beginning from the year in which it is
incorporated.
This amendment will take effect from 1st April, 2021 and will, accordingly, apply in relation to the
1) Om Ltd., an eligible startup having turnover of Rs. 50 crore in the 3 rd year after its incorporation
is planning to avail tax holiday under section 80-IAC of the Act. Examine the eligibility.

Om Ltd is not eligible to avail tax holiday Om Ltd is eligible to avail tax holiday for the

under section 80-IAC since its turnover is period of consecutive 3 years under section 80-
above Rs 25 crore during the previous year IAC since its turnover is less than Rs 100 crore
during the previous year
2) Lovely Ltd., an eligible startup having turnover of Rs. 20 crore in the 6 th year after its
incorporation is planning to avail tax holiday under section 80-IAC of the Act. Examine the
eligibility.

Lovely Ltd is eligible to avail tax holiday Om Ltd is eligible to avail tax holiday for the
under section 80-IAC since its turnover is less period of consecutive 3 years under section 80-
than Rs 25 crore during the previous year. IAC since its turnover is less than Rs 100 crore
However, it can claim the tax holiday for during the previous year.
consecutive 2 years i.e. during the 6th year
and 7th year after its incorporation.
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BUDGET 2020 ANALYSIS by CA VIVEK GABA

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BUDGET 2020 ANALYSIS by CA VIVEK GABA

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CA VIVEK GABA ANALYSIS OF BUDGET 2020 TAXATION

Source: Finance Bill, Memorandum, FM Speech

Proposed Amendments via Finance Bill, 2019

1) Personal Income Tax Rates of Tax

Proposal to introduce Section 115BAC

IVIDYA ACADEMY & EXPERT CA CLASSES - 7703880232 Page 2

b) without set off of any loss,-

d) without any exemption or deduction for allowances or perquisite, by whatever name

IVIDYA ACADEMY & EXPERT CA CLASSES - 7703880232 Page 3

Effect of the proposed amendment: (With Examples)

Upto 2,50,000 = Nil Tax

IVIDYA ACADEMY & EXPERT CA CLASSES - 7703880232 Page 4

Total Tax = 2,62,500

Final Tax = 2,73,000

OPTION – 2 (New Tax Regime Section 115BAC)

Final Tax = 1,95,000

Option 1: (Exisitng Rates)

IVIDYA ACADEMY & EXPERT CA CLASSES - 7703880232 Page 5

Final Tax = 1,56,000

OPTION – 2 (New Tax Regime Section 115BAC)

Final Tax = 1,95,000

TAX LOSS = 1,95,000 – 1,56,000 = 39,000

OPTION 1: (Exisitng Rates)

IVIDYA ACADEMY & EXPERT CA CLASSES - 7703880232 Page 6

Final Tax = 1,40,400

OPTION – 2 (New Tax Regime Section 115BAC)

TAX LOSS = 1,95,000 – 1,40,400 = 54,600

Final Tax = Nil

IVIDYA ACADEMY & EXPERT CA CLASSES - 7703880232 Page 7

OPTION – 2 (New Tax Regime Section 115BAC)

Final Tax = 36,400

TAX LOSS = 36,400 – NIL = 36,400

2) Tax rates for Companies

IVIDYA ACADEMY & EXPERT CA CLASSES - 7703880232 Page 8

3) Tax Rates in case of Co–operative Society

Section 115BAD proposed to provide an option to a resident co-operative society an option to

3) the option so exercised cannot be withdrawn;

4) The surcharge applicable to such co-operative society shall be 10%

IVIDYA ACADEMY & EXPERT CA CLASSES - 7703880232 Page 9

4) CORPORATE DIVIDEND TAX/DIVIDEND DISTRIBUTION TAX

IVIDYA ACADEMY & EXPERT CA CLASSES - 7703880232 Page 10

Current Provision Proposed Provision

IVIDYA ACADEMY & EXPERT CA CLASSES - 7703880232 Page 11

Current Provision Proposed Provision

In the hands of Rashi: Dividend exempt under In the hands of Rashi:

Current Provision Proposed Provision

In the hands of LMN Ltd.: Dividend exempt In the hands of LMN:

5) Focus on real estate sector:

Increase in safe harbour limit of 5% under section 43CA, 50C

IVIDYA ACADEMY & EXPERT CA CLASSES - 7703880232 Page 12

Comparision between current and proposed provisions

Case 1: where stamp duty value is Rs. 53,50,000

Current Provision Proposed Provision

Case 2: where stamp duty value is Rs. 55,50,000

Current Provision Proposed Provision

IVIDYA ACADEMY & EXPERT CA CLASSES - 7703880232 Page 13

6) Rationalisation the provisions of TAX AUDIT

Gross turnover of Turmeric Ltd is Rs. 4,50,00,000

Particulars Cash Other than cash Requirement of audit

IVIDYA ACADEMY & EXPERT CA CLASSES - 7703880232 Page 14

Receipts 17% of total receipts 83% of total receipts Required

Impact on TDS section:

7) Due date of filing return of income

Assessee Current Provisions Proposed provisions