Image credit: Hans India

Source: Economic Times

Buyback of listed companies would be subject to payment of tax and surcharge at the effective rate of 23.30 percent from July 5.

July 06, 2019 – Here are the proposed rules and regulations companies should know:

  1. The base rate for companies (with turnover of less than Rs 400 crore ($5,714,286) in Fiscal Year 2017-18 has been reduced to 25 percent from 30 percent. Thus, the effective tax rate after surcharge and cess (assessment) will be 29.12 percent instead of 34.94 percent.
  2. Earlier, payment made to non-residents without tax deducted at source (TDS) resulted in disallowing the expenditure. In a relaxation, the Budget proposes that if the non-resident has paid tax on the income and provides a Chartered Accountant (CA) certificate, then the payer will not suffer the disallowance. Second, no penalties will be imposed on the payer.
  3. Buyback of listed companies would be subject to payment of tax and surcharge at the effective rate of 23.30 percent from July 5, 2019. Earlier, only unlisted companies faced this levy.
  4. Losses can be carried forward by a startup, even if there is a change in the shareholding. However, it is essential that 51 percent of the voting power remains common in both the year of loss and the year of setoff (that is, the year in which the loss is to be deducted from the profits made to arrive at taxable income). Earlier, such carry-forward and set-off was allowed if it was incurred within 7 years of incorporation and there was no change in shareholding.
  5. Cash withdrawals exceeding Rs 1 crore ($142,857, using the exchange rate of 70 rupees per dollar) in aggregate during the year from an account with a bank/ post office would suffer TDS at the rate of 2 percent with effect from September 1, 2019.
  6. The onus is on India Inc. to promote digital transactions. All business enterprises having an annual turnover of Rs 50 crore ($7,142,850) or more have to provide an electronic mode of payment to their customers. Non-co
  7. Non-residents, including foreign entities that were doing business with India faced delays in obtaining a certificate for nil or lower withholding of taxes in India. Now this mechanism is online and should lead to speedier processing.
  8. Income declared for the first time in a return, in response to a reassessment notice, will be considered as income being under-reported and will be liable to penalty. The fine will be 50 percent of the tax on such under-reported income.
  9. Deduction of interest on any loan or advance borrowed from non-bank finance companies or NBFCs is allowable only if the interest is actually paid before the due date of filing of the tax return.
  10. While the government has introduced pre-filled returns to make life easier for individual taxpayers, financial institutions — like banks, stock exchanges, mutual funds, etc. — will have to provide a host of information to the department. Even the smallest transaction will have to be reported. Earlier, there was a threshold limit of Rs 50,000 for furnishing information for specified financial transactions like purchase of units of mutual funds.