Business Bureau :
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 choose. While under the old tax regime the individuals can continue paying taxes, as they had been doing till now or 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, said CA Julfesh Shah while recently speaking at a programme on ‘Critical Analysis of Budget 2020’ organised by COSIA, Vidarbha and GIZ Inc at MIA Club Hall.
He further said that main exemptions that taxpayers will have to forego if they opt for the new regime are standard deduction of Rs 50,000 to salaried tax payers, 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, deduction under section 80C for provident fund contribution, life insurance premium, school tuition fee, 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. He said that Budget proposes that a seller should collect 0.1 per cent as tax collected at source (TCS) from a buyer on sale of goods worth more than Rs 50 lakh in a year, if the sellers sales exceeds 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 per cent. “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.
The move would also increase compliance burden as well as block working capital of many businesses”, he added. CA Sandeep Dhodapkar made a presentation on ‘Budget Impact on MSMEs’ and 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 Budget 2020. 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 venture with turnover up to Rs 100 crore, as opposed to the previous threshold of Rs 25 crore, can now avail 100% profit deduction in 3 years 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,” he added. Mayank Shukla, President of COSIA said that it has always been COSIAs endeavor to organise such important programmes of critical analysis on Budget which is a regular feature every year. Dr Ravindra Aher of GIZ Inc, a German establishment informed the gathering about the objectives of GIZ Inc and its special thrust on development programmes on MSMEs in India. He assured a long term association with COSIA and looked forward work collectively for the development of MSMEs in Vidarbha. Core Committe Member Pranav Ambaselkar proposed a vote of thanks. 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 and large number of people from industry, trade and commerce.