Budget 2019 decoded: 10 things India Inc should know

Tax on buyback of listed cos to 2% TDS on withdrawal of over Rs 1 cr, here's what India Inc must know.

BCCL
1. The base rate for companies (with turnover of less than Rs 400 crore in FY 2017-18) has been reduced to 25% from 30%. Thus, the effective tax rate after surcharge and cess will be 29.12% instead of 34.94%

2. Earlier, payment made to non-resident 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 CA certificate, then the payer will not suffer the disallowance. Second, no penalties will be imposed on him

3. Buyback of listed companies would be subject to payment of tax and surcharge at the effective rate of 23.30% 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% 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 in aggregate during the year from an account with a bank/ post office would suffer TDS at the rate of 2% 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 or more have to provide an electronic mode of payment to their customers. Non-compliance will entail penalty of Rs 5,000 per day
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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% of the tax on such underreported income

9. Deduction of interest on any loan or advance borrowed from NBFC 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
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GOOGLY
Buyback schemes already announced by listed companies prior to introduction of the Budget proposal, but where payments have not been made to the shareholders, will also be hit by the 23.3% tax levy. This will be on the difference between the buyback price and the original issue price

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