CBDT vide notification no.75/2019 dated 28th September, 2019 extended the last date of linking PAN card and Aadhar to 31st December, 2019 from 30th September, 2019.
Pan – Aadhar Linking – Date extended
Month: September 2019
Income Tax Return: Due date extended
The official handle of Income tax tweeted that the due date for filing income tax returns for those whose accounts are required to get audited is extended to 31.10.2019 from 30.09.2019.
The text of the tweet is as follows:
“On consideration of representations recd from across the country,CBDT has decided to extend the due date for filing of ITRs & Tax Audit Reports from 30th Sep,2019 to 31st of Oct,2019 in respect of persons whose accounts are required to be audited.Formal Notification will follow.”
New Tax Rate for Domestic Companies
CORPORATE TAX – AN ANALYSIS BASED ON TAX LAWS (AMENDMENT) ORDINANCE 2019
The Tax Laws (Amendment) Ordinance, 2019, which came into force on 20th September, 2019, brings in major amendments with regard to taxation on Corporates. The Ordinance bring option to domestic companies to continue with the present scheme and continue enjoying the exemptions and incentives or to opt for the reduced tax rate prescribed for the existing domestic companies under this ordinance. The same will be applicable from the Financial Year 2019-20 (Assessment year 2020-21).
As per the ordinance, two set of rates were prescribed:
- Section 115BAA – 22% Tax rate for existing domestic companies
- Section 115BAB – 15% tax rate for manufacturing domestic companies incorporated on or after 01st October, 2019.
Effective Tax Rate
Even though the rate of Income Tax prescribed under Section 115BAA and Section 115BAB is 22% and 15% respectively, the ordinance amends Finance (No.2) Act, 2019 and inserted a new surcharge provision for income chargeable under these sections. As per the ordinance a surcharge of 10% is applicable on the income tax and the same has to be increased by the cess at 4%. So the effective rate of tax will be 25.168% (22 x 1.10 x 1.04) in case of Section 115BAA and 17.16% for Section 115BAB.
Minimum Alternate Tax (MAT)
As per the Ordinance, MAT will not be applicable for those domestic companies opting to pay Income Tax as per the provisions of Section 115BAA and Section 115BAB of the Income Tax Act. For those companies who are not opting or eligible to opt the scheme, the rate of MAT will be 15% from FY 2019-20. The same was 18.50% earlier, and the same is reduced now to 15%.
The Conditions for availing the reduced tax rate is discussed in detail below:
- Section 115BAA – Tax Rate of Existing Companies – 22%
The following are the conditions to be complied with by the existing domestic Companies
- Following deductions should not be claimed while calculating total income.
- Section 10AA – Exemption for special economic zone.
- Section 32(1)(iia) – Additional deduction for plant and machinery for setting up manufacture or production of any article or thing on or after 01.04.2015
- Section 32AD-Investment in new plant & machinery in notified backward areas in certain states.
- Section 33AB – Tea Development/Coffee Development/Rubber Development Account- Deduction for assesses carrying on business of growing and manufacturing Tea/Coffee/Rubber on deposit of amount in any national bank as per the scheme approved by Tea/Coffee/Rubber board.
- Section 33ABA – Site Restoration Fund-Deposit by an assesse carrying on business consisting of the prospecting for or extraction or production of petroleum or natural gas.
- Section 35 – Scientific Research
- Sum paid to research organization – Section 35(ii)
- Sum paid to a company to be used by it for scientific research – Section 35(iia)
- Sum paid to a research association/university/college/other institution undertaking research in social science or statistical research – Section 35(iii)
- Sum paid to National laboratory/university/IIT with a specific direction to use for scientific research – Section 35(2AA)
- Expenditure incurred by a company engaged in the business of bio-technology and incurs expenditure in scientific research – Section 35(2AB)
- Section 35AD-Expenditure on specified business, whole of any expenditure of capital nature incurred for specified business.
- Section 35CCC – Expenditure on agriculture extension project by an assessee.
- Section 35 CCD-Expenditure on skill development by a company.
- Heading C of Chapter VI A except section 80JJAA In respect of employment of new employees. Deduction in respect of profit from:
- Newly established industrial undertaking or hotel business in backward areas – Section 80HHNewly established SSI undertaking in certain areas – Section 80HHA
- Projects outside India – Section 80HHB
- Certain type of housing projects – Section 80HHBA
- Profits retained for export business – Section 80HHC
- Earnings in convertible foreign exchange – Section 80HHD
- Export of computer software – Section 80HHE
- Export /Transfer of film/software etc. – Section 80HHF
- Industrial undertaking after a certain date etc – Section 80 I
- Industrial undertaking /enterprises engaged in infrastructure development etc. – Section 80IA
- Undertaking /enterprise engaged in development of SEZ – Section 80IAB
- Eligible start up – Section 80IAC
- Industrial undertaking other than infrastructure development undertaking – Section 80IB
- Certain undertaking/enterprise in certain special category states-Section 80 IC
- Hotels & Convention centers in specified area – Section 80ID
- Certain undertaking in North-Eastern states – Section 80IE
- Business of collecting & processing biodegradable waste – Section -80 JJA
- Incomes of offshore banking units & IFSC – Section 80LA
B. Set off carry forward loss attributable to above deductions (Point 1), such losses shall be deemed to have been given full effect.
C. Additional depreciation on plant & machinery should not be claimed.
D. Income tax return should be filed within the due date mentioned under section 139(1)
E. Option once exercised shall apply to the subsequent assessment years and the same cannot be with draws for the same or any other previous year.
2. SECTION 115 BAB – Tax on new domestic manufacturing companies – Tax Rate 15%.
The following are the conditions to be complied with by the manufacturing domestic Companies, incorporated on or after 01st October, 2019.
- Company set- up and registered on or after 01.10.2019 and has commenced manufacturing on or before 31.03.2023.
- Not formed by splitting up or reconstruction of a business already in existence. Exception will be undertaking which is formed as a result of reestablishment of any undertaking as referred in section 33 B/ value of such P&M should not exceed 20% of value of total P&M.
- Doesn’t use plant & machinery previously used. Exception will the P&M used outside India which is not used in India earlier and claimed depreciation and the same was imported into India.
- Doesn’t use any building previously used as hotel or convention center.
- Should not engaged in any other business other than business of manufacture/production of article/thing and research in relation to such article/thing.
- All Conditions related to section 115BAA also needs to be complied with.
- Assessing officer have power to add reasonable amount of profit owing to close connection between the company and the other person or for any other reason, the course of business between them is so arranged that business transacted between them produces to the company more than the ordinary profits.
- In case of specified domestic transaction under section 92BA, the amount of profit is determined having regard to arm’s length price.
- Returns to be filled within due date.
Kerala Flood Cess: Due date Extended
The due date for filing Kerala Flood Cess Return for the month of August, 2019 is extended to 30th September, 2019.
Taxation Law (Amendment) Ordinance, 2019
Please see the link below for the entire text of Taxation Law (Amendment) Ordinance, 2019 dated 20th September, 2019.
https://drive.google.com/open?id=12zE_N7rXelLGnzHu8iz3r2qSubryFFVU
Reduction in Income Tax Rate to Domestic Companies
The Government has bought Taxation Laws (Amendment) Ordinance, 2019 and bought following major changes:
- Existing Domestic Companies will have an option to pay tax at the rate of 22% subject to a condition that, they will not avail any exemption/incentive from Financial year 2019-20. The effective rate will be 25.17% inclusive of surcharge and cess. Such Companies are not required to pay Minimum Alternate Tax.
- Domestic Company incorporated after 01st October, 2019, making fresh investment in manufacturing, have an option to pay tax at 15% without any benefit of exemption/incentive. The effective rate with Surcharge and cess will be 17.01%. Such Companies are not required to pay Minimum Alternate Tax.
- The Companies which do not opt for the concessional rate can avail the exemption/Incentive and after the expiry of the period of exemption/incentive can opt for 22% tax. The rate on Minimum Alternate Tax for Companies availing Exemption/Incentives is reduced to 15% from 18%.
- Enhanced sucharge introduced by FInance (No.2) Act, 2019 on capital gains on equity shares or unit of equity oriented fund in the hands of Individual, HUF, AOP, BOI and AJ shall not apply.
- Tax waiver on buy back of shares by listed companies extended to companies which have already made public announcement of buy back before 5th July, 2019.
- Scope of CSR funds spending extended. Now the same can be spend on Incubators funded by Central/State Goverment/Governement Bodies and to public funded Universities, IIT, etc
Karthik & Sunil 