Finance Act 2019 Current Affairs - 2020
On December 2, 2019, Lok Sabha passed the Taxation Laws (Amendment) bill, 2019. The main objective of the bill is to provide an option for the domestic companies to pay taxes at the rate of 22%.
The bill replaced the ordinance promulgated by the President in September 2019. The ordinance reduced corporate taxes. The bill aims to amend both Income Tax Act, 1961 and Finance Act, 2019.
The bill provides the domestic companies to pay taxes at the rate of 22%. However, this can be availed only if the companies are not claiming deductions under the Income Tax act. Currently, the companies with annual turn over of Rs 400 crores are paying taxes at the rate of 25% and the companies with annual turn over more than Rs 400 crores are paying taxes at the rate of 30%.
Concessions are provided to those companies that were started after September 30, 2019 and begins manufacturing before April 1, 2023. They can pay taxes at the rate of 15% provided they do not claim deductions from other laws and rules
The companies opting for the new tax rates need not pay Minimum Alternate Taxes (MAT).
The main aim of the bill is to promote growth and investment in domestic manufacturing sector. In order to pull up the economy of the country the Union Government also reduced the corporate tax rates up to 10%. It was the biggest reduction in the last 28 years.
Tags: Bills and Acts • Bills and Amendements • Economic Growth • Finance Act 2019 • Income Tax Act 1961
President Ram Nath Kovind has given the assent for the amendments to the Indian Stamp Act 1899 introduced as part of the Finance Act 2019.
The amendments proposed are:
- Creation of the legal and institutional mechanism to enable states to collect stamp duty on securities market instruments at one place by one agency (through the Stock Exchanges or Clearing Corporations authorised by the stock exchange or by the Depositories).
- A Mechanism for appropriate sharing the stamp duty with relevant state governments based on the state of domicile of the buying client.
- Creation of a Coordination Council comprising representatives from Union and States under Article 263 of the Indian Constitution tasked with the responsibility of making recommendations regarding review/revision of stamp duty rates.
Stamp Duty Rates
- The duties levied by Maharashtra will be taken as a benchmark as the state of Maharashtra accounts for 70% of the total collection.
- The rates would be chosen in such a manner that it provides a revenue neutral position to the state governments while reducing the overall tax burden for investors.
- The stamp duty will have to be paid by either the buyer or seller of financial security, as against the current practice of levying the duty on both.
Benefits of Proposed Amendments
The amendments will rationalise and harmonise the system of levying stamp duty and help curb tax evasion. The cost of collection would be minimised while revenue productivity is enhanced. Further adoption of the centralised collection mechanism is expected to bring in not only more revenue but greater stability to the revenue collection by the states.
The amendments would further aid in developing equity markets and equity culture across the length and breadth of the country, ushering in balanced regional development.
Tags: Article 263 • Finance Act 2019 • Indian Stamp Act 1899 • Maharashtra [MPSC] • President