Income Tax Act 1961 Current Affairs - 2020
The Central Board of Direct Taxes recently clarified that the employers shall seek clarification and detect tax at source.
Section 115 BAC
The Section 115 BAC was inserted recently into the Income Tax Act, 1961. According to the section, a person receiving income other than family business shall be taxed under Section 115 BAC. This is to be furbished along with those submitted under Section 139 of the act.
The issue arose if the tax that was imposed under Section 115 BAC is to be considered under TDS (tax to be detected at source).
The CBDT has provided the following clarity
- If the tax payer is an employee of an organization and he has income other than that received from the organization, and intends to get concessional rate under Section 115 BAC should intimate the deductor each previous year.
- In case the employee fails to make the intimation, the employer shall make TDS without considering the provisions of Section 115 BAC.
Tags: CBDT • Central Board of Direct Taxes (CBDT) • Guidelines • Income Tax • Income Tax Act 1961
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.