Budget 2020 has given taxpayers an option to continue with the existing tax regime or opt for the new proposed tax regime. Assessees today are conflicted as to which regime they should really opt for and why? While under the old tax regime the individuals can continue paying taxes, as they had been doing till now; under the new regime, they will be liable to pay lower taxes, provided they forego their deductions and exemptions.One has to choose wisely after taking all factors into consideration as to which tax regime has to be
opted remarked noted financial expert CA, Julfesh Shah, while sharing his views on Budget 2020 in a program on Critical Analysis of Budget 2020 organised by COSIA, Vidarbha & GIZ Inc. at MIA Club Hall.
He further said that the main exemptions that taxpayers will have to forego if they opt for the new regime are Standard Deduction of Rs. 50,000 to salaried taxpayers, House Rent Allowance for individuals staying in rented accommodation, Interest on housing loan for self-occupied property, Leave Travel Allowance twice in block of four years, the most commonly claimed deduction under section 80C for provident fund contribution, life insurance premium, school tuition fee for children, ELSS,PPF, etc. None of the above can be claimed under the new tax regime.
A total of 70 exemptions have been done away with in the new tax regime,Mr. Shah added. He further said that the Budget proposes that a seller should collect 0.1 percent as tax collected at source (TCS) from a buyer on sale of goods worth more than Rs 50 lakh in a year, if the seller’s own sales exceed Rs 10 crore during the year. If the buyer does not have a PAN or an Aadhaar, then the rate of TCS would be 1 percent.This is an extremely harsh and retrograde provision which has been introduced without much thinking. This will impact many MSMEs, but exporters will bear the brunt because most of their sellers are not tax residents of India and hence do not have a PAN or Aadhaar.
This means exporters will either have to pay the 1 percent TCS from their own pocket or sell goods at a higher margin making them less competitive. Then, move would also increase the compliance burden as well as block the working capital of many businesses, opined CA Julfesh Shah.
Shah further elaborated that in case of the seller is an exporter, the buyer then invariably is a non- resident. Such non-residents are usually not subject to tax in India unless it falls under various other provisions of the IT Act for being taxed in India. Therefore, the absurdity of this new TCS provision is that it makes Indian exports at least 1 percent more expensive. Or the exporter would have to bear this cost, reducing their profit margin since no buyer who is not taxable in India would like to bear this cost.
He also dealt with the other proposed changes indirect tax like increase in allowance of variation in circle rate & sale consideration hoti 10%, the introduction of new section of penalty 271AAD, scrapping of Dividend distribution tax & it’s impact on stock market etc, intricacies of Vivaad se Vishwas Scheme etc.
The second speaker senior chartered accountant CA Sandeep Dhodapkar made a presentation on Budget Impact on MSMEs & said that there is a ray of hope for ailing MSME sector & aspiring entrepreneurs and small businesses that may benefit from the various initiatives that the finance minister has announced in union budget 2020.It is widely believed that the announcement caters to the rising aspirations of India and is aimed at giving the startup economy a boost.
Setting up an Investment clearance cell to offer end-to-end facilitation and support to start-ups, will give a strong lift to the country’s aspiring entrepreneurs. Start-ups have more than one reason to celebrate, as entrepreneurial ventures with turnover up to 100 Cr, as opposed to the previous threshold of 25 Cr, can now avail 100% profit deduction in 3 out of 10 years instead of the previous limit of 7 years. This will surely allow entrepreneurs to take more risks and innovate while pursuing their aspirations.
Deferring ESOP taxation in the hands of employees is another welcomed move, offering them a window of 5 years or whenever they exit the organisation, whichever is earlier. This will continue to help more start-ups hire the best candidates and retain them for longer periods of time. He also elaborated on the budget impact on power sector, infrastructure, railways & agriculture sector. He also put forth a sectoral analysis of allocation in the budget.
Earlier,Shri Mayank Shukla in his welcome remarks said that it has been always the COSIA s endeavor to organise such important programs & this program of critical analysis on Budget is their regular feature every year.He also apprised the audience about the upcoming events to be undertaken by COSIA & appealed the entrepreneurs to take maximum advantage of the initiatives.
Dr.Ravindra Aher of GIZ Inc.a German establishment informed the gathering about the objectives of GIZ.Inc & it’s special thrust on development programs on MSME in entire India.This German Co promotes & aids the research & development ,training programs & conducts various hand holding events for the cause of MSME s development in India.He assured for a long term association with COSIA & look forward collectively for the development of MSMEs in Vidarbha.Core Committe Member Pranav Ambaselkar conducted the prog & proposed a vote of thanks.
Prominently present were Sandeep Darhwekar,Chander Khosla, Reeta Lanjewar,Manisha Bawankar,Ashutosh Das,G.D.Kohli,CA Satish Gupta,Girish Pande,Anant Kamthikar,Arun Lanjewar,
Arch Swapnil Warambhe,CA Zoeb Anwar, Ruchir Agrawal, Subroto Guha, Manish Punekar & large number of people from industry,trade & commerce.