Government of India

Department of Revenue

Ministry of Finance

Central Board of Direct Taxes

New Delhi, 07th June, 2020

PRESS RELEASE

Growth Trajectory of Direct Tax Collection & Recent Direct Tax Reforms

There are reports in a certain section of media that the growth of direct taxes collection for the FY 2019-20 has fallen drastically and buoyancy of the direct tax collection as compared to the GDP growth has reached negative. These reports do not portray the correct picture regarding the growth of direct taxes. It is a fact that the net direct tax collection for the FY 2019-20 was less than the net direct tax collection for the FY 2018-19. But this fall in the collection of direct taxes is on expected lines and is temporary in nature due to the historic tax reforms undertaken and much higher refunds issued during the FY 2019-20.

This fact becomes more apparent if we compare the gross collection (which removes anomalies created by the variation in the amount of refund given in a year) after taking into account the revenue foregone estimated for the bold tax reforms undertaken, discussed below, which have a direct impact on the direct taxes collection for FY 2019-20. It may also be noted that in FY 2019-20, amount of total refunds given was Rs. 1.84 lakh crore as compared to Rs. 1.61 lakh crore in FY 2018-19 which is a 14% increase year-on-year.

             I. Reduction in corporate tax rate for all existing domestic companies:

In order to promote growth and investment, the Government has brought in a historic tax reform through the Taxation Laws (Amendment) Ordinance 2019 which provided a concessional tax regime of 22% for all existing domestic companies from FY 2019-20 if they do not avail any specified exemption or incentive. Further, such companies have also been exempted from payment of Minimum Alternate Tax (MAT).

II. Incentive for new manufacturing domestic companies: In order to attract investment in manufacturing sector, the Taxation Laws (Amendment) Ordinance 2019 has drastically reduced the tax rate to 15% for new manufacturing domestic company if such company does not avail any specified exemption or incentive. These companies have also been exempted from payment of Minimum Alternate Tax (MAT).

iii. Reduction in MAT rate: In order to provide relief to the companies which continue to avail exemption/deduction and pay tax under MAT, the rate of MAT has also been reduced from 18.5% to 15%.

iv. Exemption from income-tax to individuals earning income up to Rs. 5 lakh and increase in standard deduction: Further, to provide complete relief from payment of income-tax to individuals earning taxable income up to Rs. 5 lakh, the Finance Act, 2019 exempted an individual taxpayer with taxable income up to Rs. 5 lakh by providing 100% tax rebate. Also, to provide relief to the salaried taxpayers, the Finance Act, 2019 enhanced the standard deduction from Rs. 40,000 to Rs. 50,000.

2. The revenue impact of these reforms have been estimated at Rs. 1.45 lakh crore for Corporate Tax and at Rs.23,200 crore for the Personal Income Tax (PIT). Tax buoyancy on gross direct tax collection after adjusting the revenue foregone for the above mentioned tax reforms is as under:

(Rs. in crore)

	Gross Direct Tax Collection for FY 2018-19 (A)	Actual Gross Direct Tax Collection for FY 2019-20 (B)	Adjustment due revenue foregone for Tax Reforms undertaken during FY 2019-20 (C)	Adjusted Gross Direct Tax Collection for FY 2019-20 (D)=(B+C)	Growth rate in Gross collection for FY 2019-20 (E) (i.e., D over A)	Nominal GDP Growth rate FY 2019-20 (F)	Tax buoyancy FY 2019-20 (G)=(E/F)
Corporate Tax	7,69,301	6,78,398	1,45,000	8,23,398	7.03	7.20	0.98
Personal Income Tax (PIT)	5,28,373	5,55,322	23,200	5,78,522	9.49	7.20	1.32

Total            12,97,674        12,33,720       1,68,200         14,01,920        8.03              7.20          1.12

3.  Therefore,   by   removing   the   effect   of   the   extraordinary   and   historic   tax   reform measures and higher issuance of refunds during the FY 2019-20, the buoyancy of total gross direct tax collection comes to 1.12 and almost 1 for Corporate Tax and 1.32 for Personal Income Tax. These buoyancies indicate that the growth trajectories of both the arms of direct taxes, i.e., Corporate Tax and PIT are intact and are rising steadily. Further,  the  higher  growth  rate  in direct taxes  as compared  to  growth  rate  in the GDP even in these challenging times proves that recent efforts for the widening of the tax base undertaken by the Government are yielding results.

4. Furthermore, the assertion that inspite of the tax reforms, the investment has not been picking up is not correct and is without appreciation of the reality of the business world. The setting up of new manufacturing facilities requires various preliminary steps like acquisition of land, construction of factory sheds, setting up of offices and other infrastructures, etc. These activities cannot be completed in just a few months and the manufacturing plants cannot start manufacturing goods from the next day of the announcement of reforms. The tax reforms were announced in September, 2019 and the results are expected to be visible in the next few months and in years to come. The outbreak of COVID-19, may further delay this process but the growth in production due to these tax reforms is bound to happen and cannot be stopped.

5. The Government is committed to provide a hassle free direct tax environment with moderate tax rate and ease of compliance to the taxpayers and also to stimulate the growth by reforming the direct taxes system. Some of the recent steps taken in this direction, apart from those discussed above, are as under:

1. Personal Income Tax - In order to reform Personal Income Tax, the Finance Act, 2020 has provided an option to individuals and co-operatives for paying income-tax at concessional rates if they do not avail specified exemption and incentive.

2. Abolition of Dividend Distribution Tax (DDT) - In order to increase the attractiveness of the Indian Equity Market and to provide relief to a large class of investors in whose case dividend income is taxable at the rate lower than the rate of DDT, the Finance Act, 2020 removed the Dividend Distribution Tax under which the companies are not required to pay DDT with effect from 01.04.2020. The dividend income shall be taxed only in the hands of the recipients at their applicable rate.

3. Vivad   se   Vishwas    -   In   the   current   times,   a   large   number   of   disputes related to direct taxes are pending at various levels of adjudication from Commissioner (Appeals) level to Supreme Court. These tax disputes consume a large part of resources both on the part of the Government as well as taxpayers and also deprive the Government of the timely collection of revenue. With these facts in mind, an urgent need was felt to provide for resolution of pending tax disputes which will not only benefit the Government by generating timely revenue but also the taxpayers as it will bring down mounting litigation costs and efforts can be better utilized for expanding business activities. Direct Tax Vivad se Vishwas Act, 2020 was enacted   on   17^th   March,   2020   under   which   the   declarations   for   settling disputes are currently being filed.

4. Faceless E-assessment Scheme - The E-assessment Scheme, 2019 has been notified on 12^th September, 2019 which provides for a new scheme for making assessment by eliminating the interface between the Assessing Officer and the assessee, optimizing use of resources through functional specialization and introducing the team-based assessment.

5. Faceless appeals - In order to take the reforms to the next level and to eliminate human interface, the Finance Act, 2020 empowered the Central Government to notify Faceless Appeal Scheme in the appellate function of the department between the appellant and the Commissioner of Income-tax (Appeals).

6. Document Identification Number (DIN) - In order to bring efficiency and transparency in the functioning of the Income Tax Department, every communication of the Department whether it is related to assessment, appeals, investigation, penalty and rectification, among other things, issued from 1st October, 2019 onwards are mandatorily having a computer-generated unique document identification number (DIN).

7. Pre-filling of Income-tax Returns - In order to make tax compliance more convenient, pre-filled Income Tax Returns (ITR) have been provided to individual taxpayers. The ITR form now contains pre-filled details of certain incomes such as salary income. The scope of information for pre-filling is being continuously expanded by pre-filling more transactions in the ITR.

8. Encouraging digital transactions - In order to facilitate the digitalisation of the economy and reduce unaccounted transactions, various measures have been taken which include reduction in rate of presumptive profit on digital turnover, removal of MDR charges on prescribed modes of transactions, reducing the threshold for cash transactions, prohibition of certain cash transactions, etc.

9. Simplification of compliance norms for Start-ups - Start-ups have been provided hassle-free tax environment which includes simplification of assessment procedure, exemptions from Angel-tax, constitution of dedicated start-up cell etc.

10. Relaxation in the norms for Prosecution: The threshold for launching prosecution   has   been   substantially   increased.   A   system   of   collegium   of senior officers for sanction of prosecution has been introduced. The norms for compounding have also been relaxed.

11. Raising of monetary limit for filing of appeal - To effectively reduce taxpayer grievances/ litigation and help the Income Tax Department focus on litigation involving complex legal issues and high tax effect, the monetary thresholds for filing of departmental appeals have been raised from Rs. 20 lakh to Rs. 50 lakh for appeal before ITAT, from Rs. 50 lakh to Rs. 1 crore for appeal before the High Court and from Rs. 1 crore to Rs. 2 crore for appeal before the Supreme Court.

12. Expansion of scope of TDS/TCS - For widening the tax base, several new transactions were brought into the ambit of Tax Deduction at Source (TDS) and Tax Collection at Source (TCS). These transactions include huge cash withdrawal, foreign remittance, purchase of luxury car, e-commerce participants, sale of goods, acquisition of immovable property, etc.

 

(Surabhi Ahluwalia)

Commissioner of Income Tax

(Media & Technical Policy)

Official Spokesperson, CBDT

 

Government of India

Ministry of Finance

Department of Revenue

Central Board of Direct Taxes 

New Delhi, May 29th, 2020

PRESS RELEASE

Meeting of BRICS Heads of Tax Authorities held on May 29, 2020 – Held through VC

Meeting of the Heads of Tax Authorities of the BRICS countries, namely the Federal Republic of Brazil, the Russian Federation, the Republic of India, the People’s Republic of China and the Republic of South Africa was held on May 29, 2020. The meeting was hosted by the Federal Tax Service of Russia, which currently holds the BRICS Presidency, to discuss the response of BRICS Tax Authorities to the COVID-19 pandemic and to explore potential areas of cooperation in tax matters. The meeting was scheduled to be held in Moscow, but was held through video conference in view of COVID-19. The Finance Secretary to the Government of India, Dr. Ajay Bhushan Pandey represented India at the meeting.

The Finance Secretary shared with other BRICS nations, various measures taken by India to mitigate the effect of the pandemic on the taxpayers including deferment of compliance requirements, reduced rate of interest on delayed payments and reduction in withholding tax rates. He urged the BRICS nations to share COVID-19 related tax measures taken by respective tax administrations from time to time so that it enhances our understanding of the fiscal and economic impact of the pandemic and encourages us to further evaluate various possibilities in assisting our government’s efforts in containing the spread and recovering from the impact of the pandemic.

The Finance Secretary, while extending India’s support to the ongoing work in OECD/G-20 project on addressing tax challenges posed by digitalisation, underlined the need to ensure that the new tax rules are fair and simple. It should also be flexible enough to cover new/emerging business models.

Dr. Pandey highlighted the need for adopting a “Whole of Government Approach” in dealing with cross-border financial crimes as they have ramifications in respect of various statutes, not only taxation. He, therefore, urged the BRICS countries to agree for wider sharing of information exchanged under tax treaties for countering corruption, money laundering and terrorist financing.

The tax heads of other BRICS nations shared the measures taken by their respective tax administrations and their thoughts on other agenda items like tax challenges posed by digitalisation and exchange of information.

A communiqué was issued by the tax heads at the conclusion of the meeting.

 

(Surabhi Ahluwalia)

Commissioner of Income Tax

(Media & Technical Policy)

Official Spokesperson, CBDT

 

Government of India

Ministry of Finance

Department of Revenue

Central Board of Direct Taxes

New Delhi, 28th May, 2020

PRESS RELEASE

FM launches facility of Instant PAN through Aadhaar based e-KYC

In line with the announcement made in the Union Budget, Hon’ble Union Finance Minister Smt. Nirmala Sitharaman formally launched the facility for instant allotment of PAN (on near to real time basis) today on  28^th May, 2020. This facility is now available for those PAN applicants who possess a valid Aadhaar number and have a mobile number registered with Aadhaar. The allotment process is paperless and an electronic PAN (e-PAN) is issued to the applicants free of cost.

It may be recalled that in the Union Budget, 2020, the Hon’ble FM had announced to launch instant PAN facility shortly. In para 129 of the Budget Speech, the FM had stated, “In the last Budget, I had introduced the interchangeability of PAN and Aadhaar for which necessary rules were already notified. In order to further ease the process of allotment of PAN, soon we will launch a system under which PAN shall be instantly allotted online on the basis of Aadhaar without any requirement for filling up of detailed application form.”

The facility of instant PAN through Aadhaar based e-KYC has been launched formally by the Hon’ble FM today, however its ‘Beta version’ on trial basis was started on 12^th Feb 2020 on the e-filing website of Income Tax Department. Since then onwards 6,77,680 instant PANs have been allotted with a turnaround time of about 10 minutes, till 25^th May 2020.

It may also be noted that as on 25.05.2020, a total of 50.52 crore PANs have been allotted to the taxpayers, out of which, around 49.39 crore are allotted to the individuals and more than 32.17crore are seeded with Aadhaar so far.

The process of applying for instant PAN is very simple. The instant PAN applicant is required to access the e-filing website of the Income Tax Department to provide her/his valid Aadhaar number and then submit the OTP received on her/his Aadhaar registered mobile number. On successful completion of this process, a 15-digit acknowledgment number is generated. If required, the applicant can check the status of the request anytime by providing her/his valid Aadhaar number and on successful allotment, can download the e-PAN. The e-PAN is also sent to the applicant on her/his email id, if it is registered with Aadhaar.

The launch of the Instant PAN facility is yet another step by the Income Tax Department towards Digital India, thereby creating further ease of compliance to the taxpayers.

(Surabhi Ahluwalia)

Commissioner of Income Tax

(Media & Technical Policy)

Official Spokesperson, CBDT.

 

Cabinet

Cabinet approves extension of ‘Pradhan Mantri Vaya Vandana Yojana’

Dated: 20 MAY 2020

The Union Cabinet, chaired by the Prime Minister Shri Narendra Modi, has given its approval to the following for the welfare of and to enable old age income security for Senior Citizens:

(a) Extension of Pradhan MantriVayaVandanaYojana (PMVVY) up to 31st March, 2023 for further period of three years beyond 31st March, 2020.

(b) To allow initially an assured rate of return of 7.40 % per annum for the year 2020-21 per annum and thereafter to be reset every year.

(c) Annual reset of assured rate of interest with effect from April 1st of financial year in line with revised rate of returns of Senior Citizens Saving Scheme (SCSS) upto a ceiling of 7.75% with fresh appraisal of the scheme on breach of this threshold at any point.

(d) Approval for expenditure to be incurred on account of the difference between the market rate of return generated by LIC (net of expenses) and the guaranteed rate of return under the scheme.

(e) Capping Management expenses at 0.5% p.a. of funds of the scheme for first year of scheme in respect of new policies issued and thereafter 0.3% p.a. for second year onwards for the next 9 years.

(f) Delegating the authority to Finance Minister to approve annual reset rate of return at the beginning of every financial year.

(g) All other terms and conditions of the scheme remaining the same.

          The minimum investment has also been revised to Rs.1,56,658 for pension of Rs.12,000/- per annum and Rs.1,62,162/- for getting a minimum pension amount of Rs.1000/- per month under the scheme.

Financial implications:

Government's financial liability is limited to the extent of the difference between the market return generated by LIC and the guaranteed return of 7.40% per annum initially for the year 2020-21 and thereafter to be reset every year in line with SCSS. The expenses on managing the scheme, are capped at 0.5% of assets under management per annum for the first year of the scheme and 0.3% p.a. for second year onwards for the next nine years. As such the expected financial liability v/ill range from an estimated expenditure of Rs. 829 crore in the financial year 2023-24 to Rs. 264 crore in last FY 2032-33. The average expected financial liability for the subsidy reimbursement, calculated for annuity payment on actual basis is expected to be Rs. 614 crore per year for currency of the scheme. The actual interest-gap (subsidy) would however depend upon the actual experience in terms of number of new policies issued, the quantum of investment made by subscribers, actual returns generated and the basis of annuity payment.

PMVVY is a social security scheme for senior citizens intended to give an assured minimum pension to them based on an assured return on the purchase price / subscription amount.

******

VRRK/SH
(Release ID: 1625318) 

 

Government of India

Ministry of Finance

Department of Revenue

Central Board of Direct Taxes

New Delhi, 13^th  May, 2020

PRESS RELEASE

Reduction in rate of Tax Deduction at Source (TDS) & Tax Collection at Source (TCS)            

             In order to provide more funds at the disposal of the taxpayers for dealing with the economic situation arising out of COVID-19 pandemic, the rates of Tax Deduction at Source (TDS) for  the following non-salaried specified payments made to residents has been reduced by 25% for the period from 14^th  May, 2020  to 31^st March, 2021:-

S. No	Section of the Income-tax Act	Nature of Payment	Existing Rate of TDS	Reduced rate from 14/05/2020 to 31/03/2021
1	193	Interest on Securities	10%	7.5%
2	194	Dividend	10%	7.5%
3	194A	Interest other than interest on securities	10%	7.5%
4	194C	Payment of Contractors and sub-contractors	1% (individual/HUF)  2% (others)	0.75% (individual/HUF) 1.5% (others)
5	194D	Insurance Commission	5%	3.75%
6	194DA	Payment in respect of life insurance policy	5%	3.75%
7	194EE	Payments in respect of deposits under National Savings Scheme	10%	7.5%
8	194F	Payments on account of re-purchase of Units by Mutual Funds or UTI	20%	15%
9	194G	Commission, prize etc., on sale of lottery tickets	5%	3.75%
10	194H	Commission or brokerage	5%	3.75%
11	194-I(a)	Rent for plant and machinery	2%	1.5%
12	194-I(b)	Rent for immovable property	10%	7.5%
13	194-IA	Payment for acquisition of immovable property	1%	0.75%
14	194-IB	Payment of rent by individual or HUF	5%	3.75%
15	194-IC	Payment for Joint Development Agreements	10%	7.5%
16	194J	Fee for Professional or Technical Services (FTS), Royalty, etc.	2% (FTS, certain royalties, call centre) 10% (others)	1.5% (FTS, certain royalties, call centre) 7.5% (others)
17	194K	Payment of dividend by Mutual Funds	10%	7.5%
18	194LA	Payment of Compensation on acquisition of immovable property	10%	7.5%
19	194LBA(1)	Payment of income by Business trust	10%	7.5%
20	194LBB(i)	Payment of income by Investment fund	10%	7.5%
21	194LBC(1)	Income by securitisation trust	25% (Individual/HUF) 30% (Others)	18.75% (Individual/HUF) 22.5% (Others)
22	194M	Payment to commission, brokerage etc. by Individual and HUF	5%	3.75%
23	194-O	TDS on e-commerce participants	1% (w.e.f. 1.10.2020)	0.75%

 

2. Further, the rate of Tax Collection at Source (TCS) for the following specified receipts has also been reduced by 25% for the period from 14th May, 2020  to 31^st March, 2021:-

 

S. No	Section of the Income-tax Act	Nature of Receipts	Existing Rate of TCS	Reduced rate from 14/05/2020 to 31/03/2021
1	206C(1)	Sale of
		(a) Tendu Leaves	5%	3.75%
		(b)Timber obtained under a forest lease	2.5%	1.875%
		(c) timber obtained by any other mode	2.5%	1.875%
		(d) Any other forest produce not being timber/tendu leaves	2.5%	1.875%
		(e) scrap	1%	0.75%
		(f) Minerals, being coal or lignite or iron ore	1%	0.75%
2	206C(1C)	Grant of license, lease, etc. of (a) Parking lot	2%	1.5%
		(b) Toll Plaza	2%	1.5%
		(c) Mining and quarrying	2%	1.5%
3	206C(1F)	Sale of motor vehicle above 10 lakhs	1%	0.75%
4	206C(1H)	Sale of any other goods	0.1% (w.e.f 01.10.2020)	0.075%

 

3. Therefore, TDS on the amount paid or credited during the period from 14^th May, 2020 to 31^st March, 2021 shall be deducted at the reduced rates specified in the table in para 1 above. Similarly, the tax on the amount received or debited during the period from 14^th May, 2020  to 31^st March, 2021 shall be collected at the reduced rates specified in the table in para 2 above.

4.  It is further stated that there shall be no reduction in rates of TDS or TCS, where the tax is required to be deducted or collected at higher rate due to non-furnishing of PAN/Aadhaar. For example,if the tax is required to be deducted at 20% under section 206AA of the Income-tax Act due to non-furnishing of PAN/Aadhaar, it shall be deducted at the rate of 20% and not at the rate of 15%.

5. Legislative amendments in this regard shall be proposed in due course.

(Surabhi  Ahluwalia)

Commissioner of Income Tax

(Media & Technical Policy)

Official Spokesperson, CBDT