A tax regime was complicated. Now, you have an optional second. How do you decide which one to choose? This Times of India - EY guide helps you decode, guiding you through everything you need to know that will determine the status of your bank account at the end of the year
10 things you should know to channel your inner Yoda
1. A new simplified personal income tax regime of up to 15 lakh has been introduced, but you can opt for it only if you waive your claim for several exemptions (HRA, LTA), deductions (standard deduction, investment deduction in PF, PPF, premium LIC) and to compensate for certain losses (such as loss of home ownership).
2. The Dividend Distribution Tax (DDT) has been abolished and dividends will be taxed in the hands of the taxpayers receiving the applicable slab rates. In addition, TDS @ 10% will be applied to dividends paid to an individual that exceeds 5,000 during a fiscal year. This will benefit small taxpayers who are subject to taxes at lower slab rates than the applicable DDT rates.
Live plus 3. The FM yields and the FM removes. The employer's contribution to the pension fund, the National Pension System and the retirement fund that exceeds a total of 7.5 lakh per year will be taxed as salary in the employee's hands. Interest, dividends and other similar income arising from such excess contribution (greater than 7.5 lakh) will also be taxed. This will lead to an additional tax obligation, especially for individuals with high assets.
4. Payment of taxes on ESOP received by startup employees eligible to be deferred. Such tax is now paid upon completion of five years from the year of allocation of shares or sale of shares or termination of employment, whichever occurs earlier. This will improve cash flow for employees. However, these benefits are only available to eligible startup employees and not to all employers.
5. Homebuyers get some relief. No adjustments to the sale consideration on transfer of immovable property can be made where variation between stamp duty value and sale consideration is not plus than 10% of latter (earlier 5%). This will reduce hardship to taxpayers for genuine transactions in real estate.
6. Taxpayers, please open your heart and wallets too. The details of the eligible donation under Section 80G will be pre-filled in the tax returns based on the information submitted by the donor (charity). However, there is a possibility that claims may be rejected if the appropriate details of donations are not presented.
7. Minor disputes better confidence. The Vivaad se Vishwas scheme will be introduced in which taxpayers can pay the amount of the tax in dispute (without interest or fines) before March 31, 2020 and resolve pending disputes Taxpayers can also pay disputed taxes before 30 June 2020 with an additional amount (expected to be less than the fine/exposure of interest) under this scheme.
8. More (information with the tax department) is better. Instead of the annual tax statement (Form 26AS) for taxpayers on the online tax portal, a plus comprehensive annual financial statement which will capture multiple information such as sale / purchase of immovable property, sharebased transactions, etc in addition to details of taxes deducted at source has been prposed. This will enable taxpayers to reconcile the details reported in their tax returns with the information already available with the tax authorities, thereby reducing litigation.
9. Good news for homebuyers for the first time. To promote affordable housing, an additional tax deduction of up to 1.5 lakh has been extended for interest on home loans to loans sanctioned until March 31, 2021 (formerly March 31, 2020).
10. Do you travel abroad without deducting taxes at the origin of the payment to your tour operator or make a foreign remittance under the Liberalized Remittances Plan (LRS) of the Reserve Bank? Tour operators/banks (authorized distributors) will collect taxes at the source of 5% of you. If you do not provide your PAN/Aadhaar, the tax to be collected will increase to 10%.
WHILE YOUR FALCON FLIES, LOOK AT THESE TAX WINDS
The payment of the ESOP tax by startups will now be after five years from the year of allocation of shares or in the year of termination of employment or sale, whichever occurs earlier. However, it will be subject to taxes at the rates for the tax allocation. But, there is an ambiguity in the mechanism of reporting such income in returns.
Se elimina el DDT sobre los dividendos declarados por los indios cos y MF. Sin embargo, los HNI se gravarán sobre los ingresos por dividendos de las MF orientadas a acciones a una tasa plus alta que antes
Con el retiro de DDT, los costos tendrán que deducir TDS @ 10% en dividendos de plus de 5,000 durante un ejercicio fiscal. Por lo tanto, los contribuyentes, como las personas de la tercera edad, que no tuvieron que presentar declaraciones, ahora tendrán que hacerlo o presentar el Formulario 15G/Formulario 15H a cada compañía donde posean acciones.