3-Feb-2020: Removal of DDT will boost investments: CBDT
The budget proposed the removal of the Dividend Distribution Tax (DDT) payable by companies. Currently, companies are required to pay a 15% tax plus applicable surcharge and cess on the dividends. Further, investors who receive more than ₹10 lakh as a dividend in a financial year have to pay a 10% tax on such income.
The Centre has removed 15% tax plus applicable surcharge and cess on dividends, currently paid by companies. The dividend will now be taxed only in the hands of the investors.
The benefit to the non-residents: Currently, non-residents are being taxed at a higher rate than the treaty rate with the possibility of no tax credit in the home country. With dividend now being proposed to be taxed in the hands of the investors at their applicable slab rate, non-residents would get some relief with respect to the tax payable. This would help increase the attractiveness of the Indian equity market.
Addressing inequity in dividend taxation: While the DDT is applicable at a rate of 15%, the effective rate reaches to 20.56% due to surcharge and cess. Additionally, individuals were required to pay another 10% plus surcharge if the dividend income exceeded ₹10 lakh in a fiscal. A single rate of taxation is always unfair and morally wrong as it favours taxpayers who are in higher tax brackets and works against those who are in lower tax brackets, thus leading to inequity in dividend taxation.
The government believes that the new regime would encourage individuals in the low-income bracket to invest in the capital market as the tax incidence would drop significantly. A person with an income up to ₹5 lakh will not have to pay tax on dividend income as against 20.56% paid by them indirectly. The taxpayers in the low-income budget would benefit from the abolition of the DDT as the tax to be paid by them on their dividend income would be less than what they were earlier paying indirectly through it.
Increase investments: The proposal will make more investors look at debt mutual fund products since, under the prevailing framework, the effective DDT on such products was between 38% and 50%. The proposed move which will avoid double taxation applicable to dividends and bring down effective rates will help increase investments.
3-Feb-2020: Money earned in India by NRIs will be taxed
The Finance Bill proposed major policy changes to prevent tax abuse by citizens who don’t pay taxes anywhere in the world. One such proposal was to tax Indian citizens staying abroad if they are not taxable in their home country.
There were concerns that this provision would bring Indian workers’ income in zero-tax jurisdictions, like the UAE, into the Indian tax net.
Kerala Chief Minister had expressed strong disagreement over the provision amid concerns that it will hurt Indians working in the Middle East, who are contributing foreign exchange to the country through remittances.
The Finance Minister has sought to allay fears by clarifying that only money earned in India by NRIs will be taxed. Notably, only income derived from an Indian business or profession will be taxable for such citizens.
7-Oct-2019: Revenue Secretary inaugurates National e-Assessment Centre of IT Department
Revenue Secretary Shri Ajay Bhushan Pandey inaugurated National e-Assessment Scheme (NeAC). He said, it is matter of great pride and achievement for the Income Tax Department to bring NeAC to life in a small span of time. Retracing the origins of NeAC in 2017, Shri Pandey lauded the IT Department for striving to achieve transparency with speed.
Shri Pandey said that with the launch of National e-Assessment Centre (NeAC), the Income Tax Department will usher in a paradigm shift in its working by introducing faceless e-assessment to impart greater efficiency, transparency and accountability in the assessment process. With NeAC, there would be no physical interface between the tax payers and the tax officers.
The setting up of NeAC of the Income Tax Department is a momentous step towards the larger objectives of better taxpayer service, reduction of taxpayer grievances in line with Prime Minister’s vision of ‘Digital India’ and promotion of Ease of Doing Business.
In the first phase, the Income Tax Department has selected 58,322 cases for scrutiny under the faceless e-Assessment Scheme 2019 and the e-notices have been served before 30th of September 2019 for the cases of Assessment Year 2018-19.
The taxpayers have been advised to check their registered e-filing accounts/ email ids and have been requested to furnish reply within 15 days. The Department hopes that with the ease of compliance for taxpayers, the cases would be disposed-off expeditiously.
Benefits of Faceless Assessment:
- NeAC eliminates human interface between Assessing Officer and Assessee
- New System optimises the utilisation of resources through economies of scale
- NeAC introduces team based assessment with dynamic jurisdiction
- Ease of compliance for taxpayers
- Brings transparency and efficiency, thus improves quality of assessment and monitoring
- Functional specialisation as only one agency dealing with faceless assessment
- Expeditious disposal of cases
- Standardisation and quality management
About National e-Assessment Centre (NeAC): NeAC will be an independent office that will look after the work of e-Assessment scheme which is recently notified for faceless e-assessment for income tax payers. There would be a NeAC in Delhi to be headed by Principal Chief Commissioner of Income Tax (Pr. CCIT). There are 8 Regional e-Assessment Centres (ReAC) set up at Delhi, Mumbai, Chennai, Kolkata Ahmedabad, Pune, Bengaluru and Hyderabad which would comprise Assessment unit, Review unit, Technical unit and Verification units. Each ReAC will be headed by Chief Commissioner of Income Tax (CCIT). Cases for the specified work shall be assigned by the NeAC to different units by way of automated allocation systems. In view of the dynamic and all India jurisdiction of all officers of NeAC and ReAC, this kind of connective and collaborative effort of officers is likely to lead to better quality of assessments.
About Faceless e-Assessment: Centre Government had recently notified e-Assessment scheme to facilitate faceless assessment of income tax returns through completely electronic communication between tax officials and tax payers. Under the new system of faceless e-Assessment, tax payers will receive notices on their registered emails as well as on registered accounts on the web portal www.incometaxindiaefiling.gov.in with real time alert by way of SMS on their registered mobile number, specifying the issues for which their cases have been selected for scrutiny. The replies to the notices can be prepared at ease by the tax payers at their own residence or office and be sent by email to the National e-Assessment Centre by uploading the same on the designated web portal.
This new initiative of faceless assessment is expected to increase ease of compliance for taxpayers as the cost and anxiety of taxpayers are likely to be greatly reduced. No human interface with the Department would be a game changer. This is another initiative by CBDT in the field of ease of compliance for our tax payers.