PROPOSED DIRECT TAX CHANGES
Tax Rate and Residency
• Tax rate for income up to INR 15 lakh for individuals and HUFs reduced if they do not avail of specified exemptions/ deductions
• Residency rules for individual amended as under:
– Indian citizens or PIOs on visits to India to be resident if the visit is 120 days or more (as against 182 days earlier)
– Condition for Resident and Ordinary resident amended to residency in India for 4 out of 10 preceding previous years
• Indian citizens not liable to tax in any country shall be deemed to be resident in India
• Tax incentive for startups extended for startups incorporated between April 1, 2016 to April 1, 2021 having turnover not exceeding INR 100 cr (earlier INR 25 cr). Further, exemption shall be available for 3 consecutive years out of 10 years (earlier 5 years).
• ESOP issued by startups to be taxable in the hands of the employee at the earlier of (a) 60 months from the end of the previous year of exercise; (b) sale of the security; or (c) cessation of employment. Tax is to be computed based on rates in force in year when the security is allotted or transferred.
Vivad Se Vishwas – Direct Tax Dispute Resolution Scheme 2020 Tabled in Parliament
February 05, 2020: In line with the announcement made in the budget speech by the Finance Minister on 1 February 2020, the Government tabled ‘The Direct Tax Vivad se Vishwas Bill, 20201’ (the Scheme) on 5 February 2020 before Parliament. The Scheme aims to provide resolution a mechanism for pending direct tax disputes across various appellate forums viz. Commissioner of Income-tax (Appeals), Income Tax Appellate Tribunal, the High Court and the Supreme Court of India.
Clarification in Respect of Residency under Section 6 of the Income-tax Act, 1961
May 6, 2020: CBDT: A press release has been issued relaxing ‘residency’ norms under section 6 of the Income tax Act, 1961 (the Act) for individuals stranded in India owing to Covid-10 lockdown. It has been clarified that for the purpose of determining residential status under section 6 of the Act during FY 2019-20 in respect of individual who has come to India on a visit before March 22 and has been unable to leave India on or before March 31 owing to travel restrictions/quarantine/departure on an evacuation flight, his period of stay from March 22/date of quarantine to March 31/date of departure shall be ignored.
‘Instant PAN’ facility through Aadhaar-based e-KYC
May 28, 2020: CBDT: The facility for instant allotment of PAN (on near- to real-time basis) has been launched in line with the announcement made in the Union Budget 2020. The facility is made available for those PAN applicants who possess a valid Aadhaar number and have a mobile number registered with Aadhaar.
New Form 26AS is the Faceless Hand-holding of Taxpayers
July 18, 2020: CBDT: The new Form 26AS is the faceless hand-holding of taxpayers to e-file their income tax returns quickly and correctly. From the current AY, taxpayers will see an improved Form 26AS which would carry some additional details on taxpayers’ financial transactions as specified in the Statement of Financial Transactions in various categories.
Central Government amends E-assessment Scheme, 2019 to conduct faceless assessments
August 11, 2020: The Prime Minister (PM) launched a platform for ‘Transparent Taxation – Honoring the Honest.’ The tax system aims at being Seamless, Painless and Faceless with three pillars under consideration: (a) Faceless Assessment, (b) Faceless Appeals, and (c) Taxpayers’ charter, with faceless assessment and taxpayers’ charter coming into force from 13 August 2020, and faceless appeals to be available from 25 September 2020.
Disclosure Standards for Alternative Investment Funds (AIFs)
SEBI decided to introduce template(s) for Private Placement Memorandum, subject to certain exemptions, and mandatory performance benchmarking for AIFs with provisions for additional customized performance reporting. This move comes as a part of SEBI’s initiatives to streamline disclosure standards in the growing AIF space
COVID-19 update: Relief measures relating to statutory and regulatory compliance matters announced by Finance Minister
March 24, 2020: In view of the Novel Coronavirus (COVID-19) outbreak, the Union Finance & Corporate Affairs Minister (FM), Nirmala Sitharaman, announced several important relief measures being taken by the Government of India. The relief measures announced are on statutory and regulatory compliance matters relating to the Income-tax Act, 1961, Central Goods and Services Tax Act, 2017 (CGST Act), Customs Act, 1962 (Customs Act) and cognate Acts, Companies Act, 2013 and Insolvency & Bankruptcy Code, 2016 (IBC 2016). This news flash is based on the information released by the Press Information Bureau.1 Necessary notification and circulars shall be issued in due course by the respective authorities.
Clarification on Know Your Client (KYC) Process and use of Technology for KYC
April 24, 2020: SEBI: In order to enable the online KYC process, SEBI stated that an investor’s KYC process can be completed through online or app-based KYC, in-person verification through video and online submission of documents through e-signature (eSign). Further, detailed procedure is laid down in the circular.
Holding of Annual General Meeting (AGM) through Video-conferencing (VC) or Other Audio-visual Means (OAVM)
May 5, 2020: MCA: In view of Covid-19, MCA has decided to allow Companies to conduct their AGM through VC or OAVM during the calendar year 2020, subject to the fulfilment of the certain requirements.
COVID-19 update: Economic and regulatory measures announced by Finance Minister to help boost the Indian economy
May 17, 2020: MoF : The Finance Minister (FM), over a span of five days, has announced a special economic and comprehensive package which, when added to the earlier stimulus announcement and the liquidity infusion through previous monetary measures announced by the RBI, adds up to over INR 20 tn – equivalent to about 10% of India’s GDP. The measures have been directed at providing relief to the poor and needy and providing a helping hand to businesses towards getting the Indian economy up and running again post the COVID-19 pandemic fallout. The FM has announced the intent to undertake several short-term and long-term reform measures along with the monetary and fiscal stimulus package. The announcements include measures and reforms to enhance Ease of Doing Business for corporates, Insolvency and Bankruptcy Code, public sector enterprise policy for a new, self-reliant India, technology-driven education, healthcare, Companies Act and support to State Governments.
Monetary Policy Statement, 2020-21
May 22, 2020: RBI: Monetary Policy Committee on the basis of an assessment of the current and evolving macro-economic situation has decided to:
• Reduce the policy repo rate under the Liquidity Adjustment Facility (LAF) by 40 bps to 4.0% from 4.40% with immediate effect;
• The marginal standing facility rate and the Bank Rate stand reduced to 4.25% cent from 4.65%; and
• The reverse repo rate under the LAF stands reduced to 3.35% from 3.75%.
• Continue with the accommodative stance as long as it is necessary to revive growth and mitigate the impact of COVID-19 on the economy, while ensuring that inflation remains within the target.
June 04, 2020: SEBI: Due to the COVID-19 pandemic, SEBI has decided to extend the due date for regulatory filings for AIFs and VCFs for the months ending March, April, May and June 2020 to 7 August, 2020.
June 12, 2020: SEBI: SEBI had issued a circular dated February 05, 2020 providing for certain disclosure standards to be followed by SEBI registered AIFs in India. Subsequently, on June 12, 2020, SEBI issued a new circular clarifying the mechanism and timelines for compliance specifically in relation to the annual audit requirement and performance benchmarking.
Collection of stamp duty on issue, transfer and sale of units of AIFs
June 30, 2020: SEBI: SEBI stated that stamp duty is not applicable on redemption of mutual fund units but switching in mutual fund would attract stamp duty. SEBI released the FAQs on stamp duty collection with the provisions of the amended Indian Stamp Act coming into effect. The regulator said that the units of mutual fund schemes are to be considered as securities for the purpose of applicability of stamp duty.