1. ANALYSIS OF UNION BUDGET 2019-20
RAJEEV SOGANI
R SOGANI & ASSOCIATES 1

2. WAIT FOR DIRECT TAX CODE
NO BOLD TAX REFORMS
WAIT FOR DIRECT TAX CODE

3. INTERNATIONAL FINANCIAL SERVICE CENTRE (IFSC)

4. INTERNATIONAL FINANCIAL SERVICE CENTRE (India)
Gujarat International Finance Tec – City (GIFT)
Direct Job Creation Expected
5,00,000
Expected to fetch business
USD 50 Billion
Committed Investment till date
INR 11,000 Cr.
S. No.
Sectors Covered (Illustrative) 1.
International Techno Park & International Market Zone 2.
Offshore Banking 3.
Data Centre 4.
Financial Services 5.
IT/ITES 6.
BPO/KPO 7.
Insurance 8.
Commodity Exchange 9.
Global Trading Exchange

5. INTERNATIONAL FINANCIAL SERVICE CENTRES (Global Perspective)
Source: IFSL, UK

6. LISTED COMPANIES

7. ADDITIONAL INCOME TAX ON BUY BACK OF LISTED SHARES
Section 115QA provides for levy of additional income tax at 20% of distributed income on account of buy-back of unlisted shares by the company.
This shall be applicable w.e.f 5th July, 2019.
Earlier
After Budget 2019
Applicable on shares not listed on recognized stock exchange.
Applicable on shares listed on recognized stock exchange and also even unlisted shares.

8. ADDITIONAL INCOME TAX ON BUY BACK OF LISTED SHARES

9. MINIMUM PUBLIC SHAREHOLDING AT 35%
The SEBI has been asked to consider raising the minimum public shareholding in listed companies from 25% to 35%.
If implemented, it may potentially lead to offloading of Rs. 3.7 lakh crore worth of shares by 1,174 companies to meet the new norms.

10. SOCIAL STOCK EXCHANGE
In the Budget Speech, FM hinted about the introduction of a Social Stock Exchange and the proposed exchange will be regulated by SEBI.
Globally, there are a few such exchanges, such as:
Singapore’s Impact Investment Exchange
London’s Social Stock Exchange
Canada’s Social Venture Connexion
South Africa Social Investment Exchange (SASIX)

11. SUSPECTED CHANGES: Fortunately Not Done
What was suspected?
Reintroduction of Estate Duty.
Reintroduction of Wealth Tax.

12. EXPECTED CHANGES: Unfortunately Not Done
What was Expected?
Relaxation in high tax rates for searches, surveys and unexplained income.
Settlement for small cases: Changes in limits of additional tax payable.
Time limit for disposal of appeals.
Dispensing with Income Computation and Disclosure Standards- It was expected that ICDS will be omitted for facilitating ease of doing business.
High MAT Rate.
Accountability of Department.

13. 115BBE- TAX RATES ON UNEXPLAINED INCOME/EXPENDITURE
Tax/Penalty
Rate
Rate of Tax u/s 115BBE
60% of Income
Surcharge
15% of Income
EC & SHEC
2.25 % (3 % of Tax & Surcharge)
Penalty (Not levied if tax paid before 31st March of previous year) u/s. 271 AAC
6% (10% of Tax)
Total
83.25%
It was expected that the tax rates on unexplained income/expenditure/investment u/s 115BBE will be relaxed in the presented budget.

14. PENALTY PROVISIONS RELATING TO SEARCH
Particulars
If Undisclosed Income Surrendered
If Undisclosed Income Not Surrendered
Rate of Tax u/s 115BBE
60% of income
Surcharge
15% of Income
EC & SHEC
2.25 %
(3% of Tax & Surcharge)
2.25 % (3% of Tax & Surcharge)
Penalty u/s 271AAB
30% of Income
60% of Income
Total
107.25%
137.25%

15. NO CHANGE IN MAT What was Expected?
Objective of MAT regime - Facilitate taxation of "zero tax companies", by making such companies liable to pay a minimum tax based on their book profit.
What was Expected?
When there is a revision in normal tax rate, it was expected that MAT Rate will also be revised.
Pre-Amendment
Post-Amendment
Normal Tax Rate for Companies
33.063% %
Rate under MAT
20.388%

16. WELCOME CHANGES Greater use of technology proposed.
Faceless assessment.
Pre-filled and auto-populated returns.
E-verification of investor identity.

17. FACELESS ASSESSMENT – A PARADIGM SHIFT
To impart greater transparency and accountability.
To eliminate the interface between the assessing officer and the assessee.
No human intervention while scrutinizing tax returns.
Assessing officer not to know the identity of the tax payer.
Cases selected for scrutiny to be allocated to assessment units on random basis by the Central Cell .
Name, Designation or location of the Assessing Officer not to be disclosed.

18. DATA SECURITY CONCERNS

19. CHANGES IN TAX RATES

20. Rate of Surcharge in case of Individuals, HUFs, AOPs or BOIs
Total Income (Rs.)
Existing Surcharge Rate (F.Y )
New Surcharge Rate (F.Y )
Effective Tax Rate (F.Y )
Effective Tax Rate (F.Y )
50 Lakhs to 1 Crore
10%
34.32%
1 Crore to 2 Crores
15%
35.88%
2 Crores to 5 Crores
25%
39%
Exceeding 5 Crores
37%
42.74%
It is expected that the increased surcharge will raise a total of Rs. 12,000 crore for the exchequer.

21. Income Tax Rates for Domestic Companies:
This will cover 99.30% companies under the tax rate 25%. Only 0.70% Companies will have to pay
Existing Rates (F.Y )
New Rates (F.Y )
Gross Turnover or Receipt (F.Y )
Tax Rate
Gross Turnover or Receipt (F.Y )
Upto 250 Crores
25%
250 Crores to 400 Crores
30%
Exceeding 400 Crores

22. Thank You!