Impact Analysis New Corporate Taxation Regime

Transcript:Impact Analysis New Corporate Taxation Regime:
Impact Analysis New Corporate Taxation Regime Taxation Laws(Amendment) Ordinance, 2019 BY- CA MANOJ GUPTA 1 High Tax Rates = Lower Compliance Low Tax Rates = Higher Compliance 2 Major Changes 3 Section 115BAA (Effective from F.Y. 2019-20) Option to all domestic Companies to tax @ 22% plus surcharge and cess-effective rate 25.17%. No exemption or incentive may be claimed. No condition on account of turnover or nature of business Applicable to all existing and new companies Existing Tax Rates -25% & 30% plus surcharge & cess (29.12% & 34.94%)-First Schedule of Finance Act 2019 4 Option to pay Tax u/s 115BAA When & How? Should be exercised before due date of furnishing of IT Return U/s 139(1) Option may be exercised in first year or subsequent years Once exercised cannot be withdrawn 5 Exemptions or Deductions not available to companies opting for section 115BAA Section 10AA- Deduction for units established in Special Economic Zones (SEZ ) Section 32(1)(iia)- Additional Depreciation in respect of new plant and machinery Section 32 AD- Deduction for investment in new plant and machinery in notified backward areas Section 33 AB- Deduction in respect of tea, coffee or rubber business Section 33ABA- Deduction in respect of business consisting of prospecting or extraction or production of petroleum or natural gas in India Section 35(1)(ii)- Deduction for donation made to approved scientific research association, university college or other institutes for doing scientific research which may or may not be related to business. 6 Exemptions or Deductions not available to companies opting for section 115BAA Section 35(1)(iia)- Deduction for payment made to an Indian Company for doing scientific research which may or may not be related to business Section 35(1)(iii)- Deduction for donation made to university, college or other institution for doing research in social science or statistical research Section 35(2AA)- Deduction for donation made to National Laboratory or IIT’s. etc for doing scientific research which may or may not be related to business Section 35(2AB)- Deduction for capital expenditure(excluding cost of land and building) on scientific research relating to business of bio-technology or manufacturing any article or thing Section 80(IA) & 80(IB)- Deduction in respect of profit from undertakings or engaged in infrastructure development. 7 A Comparison between Corporate Tax Rates u/s 115BAA & Existing Tax Rates 8 99.3% of total Companies fall in this category 9 Biggest Gainer- Companies having Turnover of more than Rs. 400 crores