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President gives assent to Taxation and Other Laws bill


The President of India gave his assent to the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Bill, 2020, which will extend compliance-related timelines for taxpayers while offering significant relief to foreign investors.

The ministry of law and justice issued a notification to the effect.

The bill, which now becomes an Act, was issued as an ordinance on March 31, 2020, to defer compliance deadlines for direct and indirect taxes amid the Covid-19 pandemic.

Time limits for compliances and statutory actions by taxpayers between March and June 2020 because of the pandemic have been extended. All compliances have been extended till September end. The date for payment without any additional levy under the Direct Tax Vivad se Viswas Act, 2020, has been extended to December 31, 2020, or a further date as and when notified.

“Customs and excise also had to be considered similarly… the compliance dates for Vivad Se Vishwas and Sabka Vishwas schemes had to be extended as their last dates were falling in the Covid lockdown period,” finance minister Nirmala Sitharaman had said in Parliament last week.

The Act also provides significant relief to foreign investors.

Surcharge levied on the dividend income of foreign portfolio investors (FPIs) that use a trust structure will be capped at 15%, offering them significant relief. From April 1, 2020, tax exemption will be provided on the income of category III Alternate Investment Funds in the International Financial Services Centre from ‘masala’ bonds, derivatives or overseas investments.

The new legislation has brought in Faceless Assessment Scheme, 2019, empowering the central government to notify schemes for anonymous processes. Under the scheme, the government has also proposed to include transfer pricing litigation within faceless assessments.

Contributions made to PM Cares Fund would be eligible for 100% deduction from taxable income.

Among other changes, tax deduction at source or tax collection at source (TDS, TCS) at three-fourth the rate or 9% a year on transactions from May 14, 2020, till March 31, 2021, will be enacted. The lower rate of interest and exemption from penalty or prosecution in case of non-payments has been enabled in cases of payments of Equalization Levy, Securities Transaction Tax (STT), Commodities Transaction Tax (CTT) besides advance tax, TDS and TCS.

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