3️⃣ From May-Be to May-Three

by Sreetama

Look at the tax relief measures around the world.


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This Week’s Dose-

Lockdown EXT-ended! From May-Be to May-Three…

From May-Be to May-Three

Prime Minister Narendra Modi announced an extension of the current lockdown till May 3. Cinemas, malls, social gatherings, travel, etc is continue to remain shut-down. However the government has allowed a few major sectors to function like – banks, ATMs, farming, health services, e-commerce operations and a few others.

Listen all the Salaried Individuals!

What you need to know…

Income Tax India has issued a clarification – Individual and HUF taxpayers can opt for the Old or New Income Tax rates at the beginning of each financial year by informing your employer. This will help the employer to deduct TDS on your salary accurately.

What you need to look out for…

If you opted for the New Tax Regime at the beginning of the financial year, you cannot go back on that decision for the remaining year. However you do have an option to change the income tax rates while filing your Income Tax Return.

Business owners and Professionals cannot change the Tax Regime in the future financial years except in certain circumstances. Read here for more information.

New vs Old Tax Regime

India WOOs foreign investment with tax changes

With the crisis gripping the globe, India understands the need for investments. It’s been known that exemptions on dividends, interests and capital gains attract investment. The arrow points to – SWFs (Sovereign Wealth Funds) – these are investment funds issued by the government used to generate good returns in the long run. Also used to stabilize budget and economy when revenue and exports are extremely volatile.

Exemption on investment on infrastructure

This is for entities investing in an Indian business engaged in infrastructure projects. A complete exemption is provided to income earned in the form of dividend, interest and long-term capital gains by SWFs.

Taxation of Dividend Income

Budget 2020 brought with it a major policy change for taxing dividend income. Previously, tax was levied in the hands of the Indian company (as an additional tax) paying the dividend (Dividend Distribution Tax, or DDT). Such dividends were tax-free in the hands of the shareholder, irrespective of whether Indian residents or non-residents.

Under the new regime, DDT is abolished and the tax on dividend income will depend upon the applicable income tax slab rate to the shareholder. Dividend to non-resident shareholders will be taxed between 5 to 15%.

India has been using a lot of farsightedness in its amendments. Hoping India can woo foreign investors.

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Byte of the Day

“Tax reform means, ‘Don’t tax you, don’t tax me. Tax that fellow behind the tree.”

– Russell Long


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