The New Wage Codes: Introduction

The new pay laws in India will not take effect immediately. The present wage system for many employees will be implemented, according to a senior Labor Ministry official. The implementation of the new pay code has been postponed in order to update the payment structure, which will begin tomorrow.

Many industry professionals have been left breathless by the delay in the implementation of this new wage legislation. To comply with the new rule, tens of thousands of businesses are striving to develop a new remuneration structure for their employees. They are pleased with the deferral of the new wage law in this aspect. Many experts believe that this law needs greater clarification.

In fact, the new pay code law was passed by the central government in 2020. It is expected to go into effect on April 1st. As a result, significant adjustments in both employees and businesses are required as a result of the new bills.

The Central Government has agreed that the base salary shall be 50% of the total compensation, with allowances not exceeding 50% of the total income. Changes in the allocation of base salary and allowances indicated in the salary are a result of this. Many changes, such as gratuity and PFP Pankam, have yet to occur. Employees’ net wages must be cut as a result. However, as a result of the recent modifications, the PF and gratuity amounts will continue to rise until retirement.

Industry Specialists on the Delay

Experts in compensation, law, and recruitment perceive this as a brief respite. These specialists are working with thousands of firms to design a new compensation structure for workers that includes putting 50% of gross salaries under the basic pay umbrella and other changes mandated by the new wage code.

As a result of the delay, businesses will have more time to modify employee benefits operations. According to compensation specialist Aon, most companies are still waiting to clarify whether basic pay components should be included or excluded.

Following the restructuring of the New-Wage Code Deferred

The new wage system will affect most of India Inc.’s remuneration structures after the government announces it.

The Wages Code, which was passed by Parliament last year, contains these additional restrictions. Indian companies/employers/workers would observe changes in such compensation components as take-home wage, provident fund, and gratuity, payslips, and so on whenever they are implemented. As a result, India Inc’s balance sheets will be harmed. Both government and private sector jobs are covered by the Wage Code.

Allowances will be set at 50% of total payments under the new salary definition. In the private sector, the basic pay component must account for 50% or more of a worker’s total remuneration. For government employees, this basic pay will consist of basic pay plus DA, which must total 50% or more.

The pay for this employee, according to the codes, would be Rs. 17,000 per month, which must be taken into account while calculating gratuity. If this employee leaves the company before the codes take effect, and assumes 15 years of service, the gratuity payable (calculated as final drew pay /26* 15* a number of years of service) will be Rs. 147,115, up from Rs. 86,538 previously, a significant increase of 1.7 times.

List of Deferred Codes

The four labor codes encompass 29 pieces of law. The objective of each of these rules differed, and as a result, the definition of wages under several of them differed as well. The codes are intended to unify, simplify, and consolidate these regulations, and thus have a consistent approach, which includes a uniform wage definition throughout all of these regulations.

The four labor codes which are not going to be implemented starting April 1st, 2021 are:

• Wage code
• Social security code
• Industrial relations code and
• Code on occupational safety, health, and working conditions.

Because states have yet to finalize the rules, the above-mentioned codes will not take effect on April 1st, meaning that take-home pay and company provident fund liabilities will remain unchanged.

‘For the time being, the laws will not be implemented because the states have not finalized the rules under the four codes.’ Few states like Uttar Pradesh, Bihar, Madhya Pradesh, Haryana, and Uttarakhand have, however, already circulated the drafted rules.

Wage code

The term wages refer to an employee’s total payment. Wages will be divided into three components, according to the wage code, which was passed in December 2019: basic pay, dearness allowance, and retention payment.

The term “wages” as defined in today’s laws refers to “all pay” supplied to an employee, with specific restrictions such as statutory bonuses, conveyance allowances, travel concessions, housing benefit or house rent allowance, payments to PF and pensions, overtime, commission, and so on.

Points Covered in the New-Wage Code

1. According to the proposed wage code standards, basic pay should account for 50% or more of an employee’s total salary.
2. It also mentions that the employee’s take-home pay will be lowered as the employee’s net contribution to his or her PF would grow.
3. As a result, a higher PF payment would result in reduced in-hand compensation.
4. Employees can now cash in their vacation time under the new wage code.
5. Companies will have to restructure their employee remuneration structures in order to comply with the new wage legislation.
6. The proposed guidelines provide employers the option of offering employees a four-day workweek. Working hours, however, cannot exceed 48 hours.
7. The companies who choose to give a four-day week will have to give three consecutive off days.

The standard of definition of ‘wages’ for the Code on Wages and the Code on Social Security is the single most significant change factor in the labor code. Wages were defined differently in each of the existing acts. For example, House Rent Allowance is included as a component in the wage definition under the Maternity Benefit Act, Minimum Wages Act, Payment of Wages Act, and Payment of Bonus Act, but it is excluded under the Payment of Gratuity Act and the Employees’ Provident Fund and Miscellaneous Provisions Act. As a result, it’s been difficult for employers to keep track of the many obligations imposed by each statute.

Salary Changes within the New-Wage Code

• Basic Pay

The new wage code specifies that minimum wages must account for half an employee’s CTC. consistent with the new draft, the allowance of a part of the entire salary cannot exceed 50% of the entire salary, which suggests that the essential salary must be 50%.

• Provident Fund

Previously, the PF was supported an employee’s basic salary. But now the employer and employee’s contributions are going to be supported by half the CTC. Therefore, your PF contribution is going to be increased, but your wage will get decreased.

• Gratuity

Gratuity also will be adjusted consistently with the new wage code. Further, gratuity is that the amount of cash accumulated for you at the completion of a final and permanent work term. Even after a year of service, the worker is permitted a gratuity.

• Impact on Taxes

Employees with a better salary would pay more tax because the tax planning option is restricted to 50% of the CTC, whereas the lower-salaried employees would be protected by higher retirement contributions and lower taxes.

This delay comes as an enormous relief for Indian companies because it will give longer to companies to transform the employee’s salary structure and other HR policies. Once the wages code comes into force, the most important change within the salary slip is going to be the way of calculation of basic pay and PF of employees.

New salary math decoded: Check it out

Most pay structures in the country will change as a result of the new payment regime, according to staffing companies and HR professionals. The basic salary component is currently substantially lower than 50% for the vast majority of employees.

Allowances can make up as much as 80% of the remuneration for high-earning employees, according to data from several employment firms. Employees in this category are expected to have the greatest reduction in take-home pay.

Furthermore, following the introduction of the code, both worker and company contributions to the Provident Fund will increase. As a result, most workers’ take-home pay will likely decrease.

Overall, while employees will see a decrease in take-home pay, businesses will see an increase in expenditures as their PF payments increase. Along with this, businesses will suffer another blow: when basic pay rises, so will workers’ gratuity payouts because gratuity is computed based on basic pay.

Workers’ social security funds will also be larger now, putting more pressure on businesses. Salary structures are currently arranged in such a way that the employer’s social security contributions are reduced.

Keeping the impact in check

According to an HR specialist, the new laws would likely boost company expenditures by 10% on average since greater payroll expenditures will raise most enterprises’ salary bills.

Companies have already begun to look into methods to adjust pay packages in order to keep costs down, according to numerous reports.

According to some analysts, the new rules will have a slew of good consequences. One of them, according to Suchita Dutta, executive director of the Indian Staffing Federation, is that companies will find it simpler to be more compliant, and employees will have more social security.

Expect Changes from June

While there has been no formal announcement of the timing, Sethuraman believes it will begin in June or July of this year. “The government has been very public about the notion that the labor regulations would be implemented soon. In fact, Finance Minister Nirmala Sitharaman mentioned labor codes during her budget statement. After the state elections are over, I expect the notification to arrive by June 1 or July 1.”

Fundamental changes that will be seen in New-Wage Code Deferred

The fluctuations in your salary should be the most concerning to you. Currently, your basic salary is made up of 20-40% of your CTC. Your basic salary will account for 50% of your CTC once the Codes are applied. The total of all allowances (HRA, travel, transport, and special allowances, for example) will never exceed the basic wage. Any remaining funds will be absorbed into the basic pay.

All salary components linked to your basic pay, such as EPF and NPS contributions, as well as gratuity, will be raised upwards if your basic pay increases. If you contribute more to EPF and gratuity, your take-home salary will decrease.

Take-Home salary may reduce from Next Fiscal Year

According to the government, companies are prepared to restructure pay packages in line with the government’s intention to churn out a new wage law, which said last year that take-home pay would reduce beginning in the next fiscal year. Furthermore, after the code is implemented, both employee and employer contributions to the Provident Fund would grow. As a result, the take-home pay of the majority of employees would undoubtedly decline. Most private companies now have a more considerable allowance component than the basic wage. As a result, if the proposed pay code is implemented, it is expected to have the most significant impact on private workers.

Conclusion

The government wanted to make sure that the retirement plans of millions of workers were secure. As a result, the new wage structure was introduced. The new wage code gives workers more security and predictability. Once the wage code has been adopted and your company’s salary arrangements have been restructured, you can consult a Legalraasta specialist to better understand the pay structure and then plan your investments accordingly.

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It’s worth noting that every month, at least 12% of an employee’s base salary and performance wages must be deducted as provident fund contributions, with the employer contributing another 12%. The government hopes that by imposing this levy, high-income taxpayers will contribute less to their PF accounts.

Take a look at this website. We will provide you with all of the information you require on these changes. Also, will also explain how these new rules will affect you.

The Announcement of New PF Tax Rules

In Budget 2021, Finance Minister Nirmala Sitharaman declared about New PF Tax Rules.  That interest on employee contributions to provident funds of more than 2.5 lakh per annum would be taxed from April 1st. According to the finance minister, the deposit maximum for which interest is tax-deductible has been set at up to 2.5 lakh. A minimum of 12% of an employee’s base salary and performance wages must be deducted as provident fund contributions, with the employer contributing another 12%.

“As the government’s ability to pay tax-free interest on provident funds grows progressively untenable, high-income taxpayers are being discouraged from raising their own PF payments.”

High-income earners and high-net-worth individuals will be impacted by this decision (HNIs). Anyone earning more than 20.83 lakh per year would have his or her EPF contribution interest taxed. “It’s worth noting that the new provision only considers employees’ contributions, not the entire contribution to the fund for any given year.

“Under present tax legislation, interest received or accrued from an employee’s provident fund (EPF) is tax-free.” Interest earned on EPF contributions (only employee contributions) over 2.5 lakh per year is now recommended to be taxed. This could have an impact on employees who earn a lot of money or make a lot of voluntary contributions to the employee provident fund.

The big-ticket money that flows into the fund and receives a tax benefit, as well as a guaranteed return of roughly 8%, falls outside the tax ambit.

Salaried employees who contribute more than the obligatory 12 percent of basic pay in the Voluntary Provident Fund will also be affected. “A considerable tax-free interest accrual, which is also not taxed on withdrawal, is now being rationalized, affecting mostly the high-income bracket.”

The amendment’s consequences

From April 1, 2021, interest accruals on yearly employee contributions to the provident fund in excess of Rs 250,000 will be taxed, which will affect the most highly paid employees. Many people consider the PF to be an old age security fund, and it is one of the most popular investment options because of the guaranteed rate of return, guaranteed benefit, lump sum withdrawal on retirement, and zero taxation on withdrawal if the employee has contributed to the fund for five years or more. This is why, in addition to the statutory payment, many employees prefer to pay a higher amount voluntarily to PF.”

“This modification will affect employees with a PF salary (basic + DA+ Retaining allowance) in excess of Rs 20 lakhs, and assuming that this is at least 50% of the employee’s overall income, his total compensation would be in the region of Rs 40 lakhs or higher.” As a result, such employees will have to deal with the tax cut on interest profits in the future. While the PF system remains appealing to those with lesser incomes, it loses its luster for those with larger incomes.

It’s worth noting that the FM had previously capped the tax exemption on employers’ contributions to PF, NPS, and superannuation funds beyond Rs 7.5 lacs per annum in the previous Budget. Only employees with a salary in the seven figures were affected. The recent plan, on the other hand, will have a broader impact. Those who primarily use the Voluntary Provident Fund to generate tax-free interest will no longer be able to do so.

Contribution to Provident Fund

Both the employer and the employee are required by law to contribute 12% of their wages to the provident fund. Employer contributions of up to 12 percent were tax-free until March 2020. Any payments in excess of 12% were subject to taxation. According to Budget 2020, any aggregate employer contribution to the Provident Fund, National Pension System, and Superannuation Fund in excess of Rs 750,000 per annum, as well as the interest earned on that contribution, will be considered a prerequisite in the hands of the employee in the year of contribution. The employer is required to treat the excess amount as a perk in the employee’s hands and withhold taxes on it. As is apparent, this measure impacts high-income earning employees who meet the above criteria.

The government recently issued perquisite valuation regulations for this purpose, which allow for taxation of employer payments to retiral accounts in excess of Rs 750,000, as well as the interest accrued thereon. The government has provided a precise formula to permit this computation for the employer.

Taxation of Interest according to New PF Tax Rules

The Finance Minister proposed in Budget 2021 to charge interest on employee contributions to the provident fund account (including voluntary contributions) that exceed Rs 250,000.

This interest would be taxed at the applicable slab rates under the heading “Income from Other Sources” based on the taxpayer’s usual accounting method (accrual or receipt). This interest is expected to be subject to tax withholding, though the methodology will be specified later. The proposed amendments would take effect on April 1, 2021, for the fiscal year 2021-22. In the past, interest earned on the said contribution was not taxable if the contributory period is more than five years.

Key Highlights: New PF Tax Rules and interest on PF

1) “To rationalize tax exclusion for high-income employees’ income, it is recommended to limit tax exclusion for interest income derived on employees’ contributions to different provident funds to a maximum annual contribution of 2.5 lakh,” Sitharaman said in Budget 2021.

2) Later, the national government raised the interest tax exemption ceiling to $5 lakh in circumstances when the employer does not contribute to the fund.

“The increase in tax-free interest on PF contributions of up to Rs. 5 lakh will bring relief to high-income taxpayers. However, there is a catch: the enhanced maximum is only relevant if the individual has contributed to a fund that does not receive any employer contributions. Employees frequently boost their voluntary contributions to the same fund to which their employer contributes “DVS Advisors LLP founder and managing partner Divakar Vijayasarathy stated.

3) High-income earners and High-Net-Worth Individuals will be impacted by this decision (HNIs). Anyone earning more than 20.83 lakh per year would have his or her EPF contribution interest taxed.

“The government has justified this action by claiming that the 2.5 lacs cap already covers roughly 93 per cent of contributors, and it is only the high taxpayers who are not,” Vijayasarathy explained.

4) “It should be noted that the new provision only considers employee contributions, not the entire contribution to the fund for any given year,” stated Gaurav Saraf, partner at VPTP & Co.

5) Salaried employees who contribute more than the necessary 12 percent of basic pay in the Voluntary Provident Fund will be affected. “A huge tax-free interest accrual, which is not taxed on withdrawal either, is now being rationalized,” said Archit Gupta. “This will mostly affect the upper-income bracket.”

Who would be impacted by New PF Tax Rules?

The government’s proposed reform aims to simplify the tax exemption for higher-paid workers who previously earned tax-free income. As a result, the government feels that such a step would help to narrow the income gap. For example, an employee paying to PF at a rate of 12% on a base salary of more than Rs 21 lakh per year would have to pay tax on the interest accrued on employee contributions in excess of Rs 250,000. As a result, such a person is likely to earn between Rs 42 and Rs 50 lakh in total.

Employees earning less than this amount would be unaffected unless they voluntarily contribute to the provident fund. Employee contributions are still eligible for a deduction under section 80C up to Rs 1.5 lakh if the simplified tax regime is not selected. The Provident Fund earns a competitive rate of interest on the outstanding PF balance, which is exempt if the contribution period is five years or longer.

While PF remains an appealing tax-saving investment option because of the rate of interest, the 100 per cent tax exemption available at the time of withdrawal, and the minimal risk element, one must now examine the tax incidence of this investment in the future.

Who is not impacted by New PF Rules 2021?

Employees earning a basic salary of up to Rs 1.75 lakh per month would not be taxed on their PF interest profits. “PF interest gains would not be taxed for employees with a basic wage of up to Rs 1.75 lakh per month.”

Those who earn more than Rs 1.80 lakh per month in basic salary will be affected. Additionally, those who make additional contributions to their VPF and their total contribution surpasses Rs 2.5 lakh will have their interest profits taxed.

The interest received on PF amounts above Rs 2.5 lakh in a year would be taxed. “The interest income accrued during the preceding year in the account of the person to the large extend it corresponds to the amount or the aggregate of amounts of the contribution made by the person outpacing two lakh and fifty thousand rupees in a preceding year in that fund, on or after April 1, 2021,” according to the Finance Bill.

There are two ways that your gift could exceed the Rs 2.5 lakh cut-off amount. The PF tax will be calculated as follows:

The PF tax calculation will be as follows:

1. Based on Basic Salary
2. Based on your voluntary contribution to the voluntary provident fund

 Example to understand New PF Tax Rules 

Let us use an example to help you better understand the New PF Tax Rules. Assume you are contributing Rs 25,000 per month to your PF account (Rs 3,00,000 per year) for the Financial Year 2021-22. For FY 2021-22, the government has already set the PF interest rate at 8%. This financial year, you will receive Rs 24,000 in interest on your PF contribution at this rate.

According to the new PF regulations, interest earned on contributions up to Rs 25,000 is not taxable. As a result, interest earned up to Rs 20,000 will be tax-free. However, you’ll have to pay tax on the extra interest you’ve accumulated. The extra Rs 4000 will be added to your appropriate income tax slab in your situation, and you will be taxed accordingly.

Here is the calculation:

Your yearly contribution in the PF account – Rs 3,00,000

Interest accrued on this contribution of Rs 3 Lakhs (@ 8% PF interest) – Rs 3,00,000 * 0.08 = Rs 24,000

Tax lieved on the interest accrued on the PF contribution – Rs 2,50,000 * 0.08 = Rs 20,000

Tax applicable on PF interest accumulated (More and above Rs 2.50 lakhs) – Rs 24,000–Rs 20,000=Rs 4,000

As per the current interest rate, let us suppose you fall in the 10% tax slab. Hence, a TDS of 10% will be deducted from the taxable interest amount of Rs 4000.

Contributors to the VPF are affected

This new rule will affect a large portion of paid employees, in addition to high-income individuals. Many paid employees consider the Provident Fund to be a successful investment opportunity, contributing more than the obligatory 12 percent of their wages. This is done through the VPF (Voluntary Provident Fund). With a sovereign guarantee, the VPF delivers an attractive tax-free return on EPF balances. This set of people will be deterred from contributing additional money to the VPF because the tax benefits on donations beyond Rs 2.5 lakhs will no longer be available to them. If you’re one of them, you should reconsider your investment strategy and take another look at VPF. You may choose to reduce your VPF contribution in order to maintain your tax-free status.

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• Corporate Tax:

1. 1. The tax rate of 15% increased to new electricity production companies.
   2. Indian corporate tax rates are now considered the lowest in the world.

• Dividend Distribution Tax (DDT):

1. 1. DDT removed giving India a more engaging investment stop.
   2. Deduction to be allotted for dividends received by the operating company from its subsidiary.
   3. Rs. 25,000 crore expected annual revenue is waived.

• Start-ups:

1. 1. Start-ups with turnover up to Rs. 100 crore to experience a 100% deduction for 3 continuous assessment years out of 10 years.
   2. Tax payment on ESOPs complied.

• MSMEs to boost less-cash economy

Turnover threshold for audit raised to Rs. 5 crores from Rs. 1 crore for businesses moving with less than 5% business transactions in cash.

• Cooperatives:

1. 1. Parity made within cooperatives and the corporate sector.
   2. Choosing to cooperative societies to be charged at 22% + 10% surcharge and 4% cess with no exemption or deductions.
   3. Cooperative societies exempted from Alternate Minimum Tax (AMT) just like Companies are excused from the Minimum Alternate Tax (MAT).

• Tax concession for foreign investments: 100% tax exemption to the interest, dividend, and capital gains income on the investment made in infrastructure and priority sectors before 31st March 2024 with the least lock-in period of 3 years through the Sovereign Wealth Fund of foreign governments.
• Affordable housing:

1. 1. Extra deduction up to Rs. 1.5 lakhs for interest given on loans exercised for an affordable house increased till 31st March 2021.
   2. Date of approval of affordable housing projects for availing tax holiday on benefits earned by developers increased till 31st March 2021.

Indirect Tax

• GST:

1. Reduced simple processing of GST return will be implemented from the 1st of April 2020.
2.  It will make return filing easy with traits like SMS based filing for nil return, return pre-filling, improved input tax credit flow, and overall simplification.
3.  Dynamic QR-code is designed for consumer invoices. GST parameters will be apprehended when payment for purchasing is done by the QR-code.

• Customs Duties:

1. Customs duty proposed on footwear to 35% from 25% & on furniture goods to 25% from 20%. 
2. Basic customs duty on imports of newsprint and light-weight coated paper decreased from 10% to 5%.
3. Customs duty rates updated on electric vehicles and components of mobiles.
4. 5% health cess to be taxed on the imports of medical devices, except those exempt from BCD.
5. Lower customs duty on some inputs and raw materials like a fuse, chemicals, and plastics.
6. Higher customs duty on some goods like auto-parts, chemicals, etc. which are also being produced domestically. 

Marvelous Achievements of Indian Economy

• India now the 5th largest economy in the world.
• 7.4% average growth measured during 2014-19 with inflation averaging around 4.5%.
• 271 million people lifted out of poverty during the 2006-16.
• India’s Foreign Direct Investment boosted to US$ 284 billion while 2014-19 from US$ 190 billion in 2009-14.
• Central Government debt decreased to 48.7% of GDP (March 2019) from 52.2% (March 2014).
• Two cross-cutting developments:

1. 1. The increase in technologies (Analytics, Machine Learning, robotics, Bio-informatics, and Artificial Intelligence).
   2. The highest ever amount of people in the productive age group (15-65 years) in India.

• GST eliminated many bottlenecks in the system.

Future Aim for supporting India’s unique global leadership, driven by Digital Revolution

• Seamless delivery of services by Digital Governance.
• Change in physical quality of life by the National Infrastructure Pipeline.
• Risk mitigation by Disaster Resilience.
• Social security by Pension and Insurance penetration.

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Latest Update on income tax slab rate 2020

The post Key Highlights of Union Budget 2020-21 appeared first on LegalRaasta Knowledge portal.

 Introduction: ITR Slab 2020-2021

The Finance Minister stated that the Union Government has created original financial measures to assure that India’s economy continues to step the track of tremendous growth. To make India stay competitive in all over the world and a valued stop for investment, a strong decision has been taken. That is to reduce the corporate tax rate for new companies in the manufacturing sector to an unparalleled level of 15%. For existing companies, the rate is taken down to 22%. As an outcome, our corporate tax rates are now amongst the lowest in the world reason removal of DDT Tax.

 As per the announcement of the Finance minister, besides of the reform steps already taken so far, the tax plans in this budget include further changes to stimulate growth, simplify the tax structure, bring peace of compliance, and decrease litigations.

Details of Latest ITR Slab 2020-2021

It is highly foreseen that the Income Tax Budget 2020 will offer some key developments and reforms in the Indian Taxation System to drive investments and extension. These measures can be reduced personal income taxes, an increase in primary exemption limit, a restructured tax rate structure among others. Have a look at the details of ITR slab 2020-2021 below:

• Personal Income Tax and Simplification of Taxation

To give significant relief to the individual taxpayers and to simplify the Income-Tax law, the Finance Minister has offered to bring a new and reduced personal income tax regime, wherein income tax rates will be significantly decreased for the individual taxpayers who forego some deductions and exemptions.

New Tax Regime announced:

*Surcharge and cess will be maintained to be imposed at the existing rates.

In the new tax regime, the substantial tax advantage will rise to a taxpayer depending upon exemptions and deductions claimed.

ITR Slab 2020-2021

The new tax regime must be optional for taxpayers. A person who is currently availing more deductions and exemption under the Income Tax Act may choose to avail them and proceed to pay tax in the old regime.

The new personal income tax rates will require estimated revenue foregone of Rs. 40,000 crore per year. Steps is created to pre-fill the income tax return so that a person who picks for the new regime will need no assistance from a specialist to file his return and pay income tax.

• DDT ( Dividend Distribution Tax)

In the present situation, companies ask to pay DDT tax on the dividend paid to its shareholders at the rate of 15% plus applicable surcharge and cess, in addition to the tax payable by the company on its earnings. In order to increase the attention of the Indian Equity Market and to give support to a large class of investors, the Finance Minister has “offered to remove DDT tax”. And select the classical system of dividend taxation, under which the companies will not ask to pay DDT. The dividend is tax only in the hands of the beneficiaries at their applicable rate.

In order to eliminate the cascading effect, the Finance Minister has offered to provide a deduction for the dividend received by holding company from its subsidiary. The removal of DDT will begin to predicted annual revenue certain of Rs. 25,000 crore. This will further make India an engaging stop for investment.

• Concessional Tax Rate for Electricity Generation Companies

New plans were introduced in September 2019, offering a concessional corporate tax rate of 15% to the recently incorporated domestic companies in the manufacturing sector that start manufacturing by 31st March 2023.
In order to bring investment in the power sector, it has been proposed to increase the concessional corporate tax rate of 15% to new domestic companies involved in the generation of electricity.

• Tax Concession for Foreign Investments

To boost investment by the Sovereign Wealth Fund of foreign governments-the Finance Minister has offered to give 100% tax exemption to their interest, dividend and capital gains income in regard to the investment done in infrastructure. And other notified sectors before 31st March 2024 and with the least lock-in period of 3 years.

• Start-ups

Startups usually use Employee Stock Option, it was taxable to simplify taxation for employees this the Finance minister has proposed deferring the tax payment for 5 years or till they leave the company even seeling their shares whichever is earliest. The limit of Rs.25 crore for startups turnover increases to Rs.100 crore allows a deduction of 100%. Also, intended to increase the period of eligibility for a claim of deduction from the existing 7 years to 10 years.

• Concessional Tax rate for cooperatives

Cooperative societies are currently charged at a rate of 30% with surcharge & cess. The Finance Minister has said to give a choice to cooperatives sorties to be taxed at 22%, surcharge 10% & 4% cess with no deduction or exceptions. They are also, offer to exempt these societies from Alternative Minimum Tax (AMT).

• MSME Enterprises

To decrease the compliance burden on small retailers, traders, shopkeepers who hold the MSME sector, the Finance Minister has offered to raise by 5 times, the turnover starts for audit from the existing Rs. 1 crore-Rs. 5 crore. To advertise less-cash economy intended that the raised limit will apply only to those businesses which carry out less than 5% of their business transactions in cash.

Which one to use for the highest tax benefits?

 As per me, this new tax slab regime is the most complex tax slab rate in any government introduces. Now many people will be in difficulty of which one to use, the Extra one along with the existing headache for taxpayers of how to save more tax.

Note: – Along with the applicable taxes, you have to extra surcharges at below rates.

• Surcharge:
  1. 10% surcharge on income tax if the entire income surpasses Rs.50 Lakhs but below Rs.1 Crore.
  2. 15% surcharge on income tax if the entire income surpasses Rs.1 Crore
• Health and Education cess: There is 4% cess on income tax including surcharge. From Budget 2018, this Health and Education Cess replaced the earlier 2% Education Cess and 1% Secondary and Higher Education Cess.

How much will you save under the new Income Tax Regime 2020-21?

With the introduction of new regimes looks over the comparison of the old & new income tax calculated and understand the total savings.

Note: These rates are specially calculated to provide you information about the income tax calculation in 2020-21. 

Conclusion

The Finance Minister stated, evaluated all exemptions and deductions which got included in the income tax legislation over the preceding several decades. Currently, more than one hundred exemptions and deductions of various natures are given in the Income Tax Act.

An attempt is made to remove about 70 of them in the new clear regime. The remaining exemptions and deductions will also be examined and rationalized in the coming years, to moreover simplify the tax system & lower the tax rate.

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Frequently Asked question

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Even entering the Indian market in 2017, UberEats has not performed adequate inroads in the online food delivery section
Uber Eats in India will stop services and direct restaurants, delivery partners, and users of the Uber Eats apps to the Zomato platform. Zomato agrees to buy Uber Technologies’s Indian food delivery business in an all-stock deal. The deal for Uber Eats, which runs in 41 cities, in action at 3 am. And its customers have already started shifting from 7 am to the Zomato app.

Uber will, in turn, receive a 9.9 % stake in the Gurugram-based company. The deal value is at about $350 million in Indian Rupees it’s Rs 2,485 crores. All of Uber Eats business details like customer information, delivery partners, and order history will now be shifted to Uber. The Uber app will redirect users to Zomato for the next six months whenever they chose the option of ‘get food delivered’. Zomato will not absorb the Uber Eats India team.

Origin firm Uber, during the time, is shifting its sources to its core business. India remains a particularly big market for Uber and we will proceed to invest in growing our local rides business.

Uber Eats to discontinue operations in India- Why?

By selling Uber Eats in India to Zomato, Uber can cut losses while taking a post in a startup that was priced at $3 billion at first this month, when it proposed $150 million from Ant Financial.

While the Indian business had developed significantly for Uber Eats, reaching 12 %of the food delivery share, it had regarded significantly less for the overall global bookings for the food division. The division is believed to be making over 25 %global losses in EBITDA.

Uber has performed very low in the Indian market year and has been shuttering or downsizing its loss-making units and geographies. With a cash burn of $20 million per month in India, the business was between the low-priority ones for the company. Last year, Uberquarterly results report that the Indian food delivery business has been a drag for it.

According to governing disclosures made in India, Uber had predicted a running loss of Rs 2,197 crore in its food delivery business for the 5 months by December 2019. This loss was larger than what was supposed to be acquired by its core ride-hailing business. That was Rs 1,645 crore according to a valuation report provided by KPMG affiliate BSR and released in November.

What will be the biggest benefit for Zomato for buying UberEats?

With Uber Eats, Zomato will now collectively have a 55% share of the food delivery market and compete largely with Swiggy. Zomato delivers to over 550 cities in India.

Live Stronger together

With competition burning up, Uber exiting the food-delivery market is just a surprise. This deal is applicable only in India and Uber Eats will proceed to run in Bangladesh and Sri Lanka.

Even Ola, which took over the Foodpanda in a $200 million all-stock deal at the end of 2017. It had a short winning run but deep-discounting drained it. UberEats got the3rd place in India after Foodpanda immersed themselves in an offer of Rs.9 for food items,”. However, its marketing wasn’t sustainable either. 

Already, by the 4th ended March 31, 2019, the commission earned by Uber from rides had decreased 4% year-on-year, half of it attached to the increased investments in Uber Eats. It also decreased marketing spends and consumer impulses. With the Indian government warning to cap its ride-hailing commission at 10% and limit the extent of rush pricing, Uber’s whole scope turned bitter.

While Ola remains to rough it out, Uber has decided to hand over its food-delivery business to a higher, more focussed opponent.

Zomato will ensure Uber Eats India users that their user experience won’t be compromised in any way. Zomato is proud to have established restaurant discovery and to have built a leading food delivery business over more than 500 cities in India. This acquisition significantly strengthens Zomato’s position in the category.

Effects of the Deal: Zomato buy Ubereats 

About 245 Uber Eats employees are affected by the deal. However, sources in Uber India say they will be in the payrolls till March 3. And that the company is doing every effort to incorporate some of them and give support to the rest in finding jobs. These employees will not be absorbed by Zomato as part of the transaction.

“You can get rides by the Uber app, which remains active and available for Indian cab users. And one can use the Uber Eats app if he/she is traveling outside India. Till then, we hope you will enjoy many more tasty moments and discover great restaurants nearby you on Zomato. If you are looking for company registration or FSSAI License in India do contact LegalRaasta for giving its comprehensive services.

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President Ram Nath Kovind last week granted his permission to the Citizenship (Amendment) Bill 2019 that has now become an Act. To whom CAA, Act won’t Apply on – Citizenship Amendment Act won’t apply to areas under the 6 schedule of the Constitution – which trades with self-governing tribal-dominated regions in Assam, Meghalaya, Tripura, and Mizoram. The bill will also not apply to states that have the inner-line permit regime i.e. Arunachal Pradesh, Nagaland, and Mizoram.

Purpose of making the CAA Act of 2019

According to the Act, members of the Hindu, Christian, Sikh, Buddhist, Jains and Muslim communities who have come from Pakistan, Afghanistan, and Bangladesh till December 31, 2014, and suffering religious abuse there will not be treated as illegal immigrants but granted Indian citizenship. It also eases the provisions for “Citizenship by naturalization”. The law reduces the duration of residency from the existing 11 years to just 5 years for people belonging to the same 6 religions and 3 countries.

Coverage of the CAA, Act

The Act includes 6 communities namely Hindu, Sikh, Buddhists, Jains, Parsis and Christian migrants from Pakistan, Bangladesh, and Afghanistan. As per the Citizenship Act of 1955, illegal immigrants are not given citizenship in India. An illegal migrant is described as people who either joined the country without proper documents or stayed on exceeding the permitted time. In 2015 the government made modifications to the passport and foreigner’s acts to provide non-Muslim refugees from these countries to stay back in India even if they joined the country without valid papers.

CAA, Act leaves out- Opposition Statement

According to the opposition’s party’s statement, they are not at all happy and agreed with the CAB introduction. Especially congress interim president Sonia Gandhi declared the “dark day” in the constitutional history. Senior Congress leader P Chidambaram says no one will take the liability for the content of CAB. The purpose of the Bill is to show the Muslims ‘you are not equal human beings with equal rights’.

Leading opposition people say the law is discriminatory as it singles out Muslims who form nearly 15 % of the country’s population. The government explains that Pakistan, Afghanistan, and Bangladesh are Islamic republics where Muslims are in bulk hence they cannot be treated as oppressed minorities. It also ensures that the government will review the application from any other community on case to case basis.

Another argument over the Bill is that it is said to violate Article 14 of the Constitution — the Right to Equality. Congress and some other political parties have been steadfastly rejecting the bill, claiming that citizenship can’t be given based on religion. There have also been widespread protests across North East in Assam, Meghalaya, Manipur, Tripura, Mizoram, Nagaland and Sikkim.

Clarification answer to the Opposition- Focus clearly

“The bill of 1955 blocks illegal migrants from getting Indian citizenship”.- This bill was introduced by H.V Patasakar. He was a member of the Indian National Congress. 

The bill describes an illegal migrant is a stranger who enters the country without valid travel documents, like a passport and visa, or enters with valid documents, but stays beyond the permitted period. Though, governments in the past have made exceptions by acts of parliament, under Article 11 of the constitution, to give citizenship to such migrants. Grant of citizenship to over 150,000 Tamil migrants from Sri Lanka in 1974, by the Rajiv Gandhi government, is one such example.

The 2019 bill (CAB) is made on the basis mentioned above, So opposition leader please stop opposing the CAA Act of 2019. The Act applies to every state and Union territories with limitations as may be applicable seek to changes the Citizenship Act, 1955 to make illegal migrants who may be Hindus, Sikhs, Buddhists, Jains, Parsis and Christians from Afghanistan, Bangladesh and Pakistan, eligible for Indian citizenship. It has decreased the minimum residency period in India to 7 years from the earlier 12 years to apply for citizenship. The bill includes a plan to cancel the registration of Overseas Citizen of India (OIC) in case they infringe any law. In principle, there is no debate on the OIC issue except that it is a bit vague since it does not list out particular crimes.”

OPPOSITION SEVERELY CRITICISES CAB PASSAGE- They must stop. You made the grounds for the problem and they solved it.

Shah Statements –

Shah agreed to this while speaking in the Rajya Sabha. Roughly translated from Hindi, he said: “When we execute this law and tell immigrants that you will get citizenship from the day you came and we will protect you, then when the citizenship numbers come, I will be in this House and Ghulam Nabi Sahab will be here, and the numbers will be in lakhs and crores. That is what I want to tell the House. This is because you have never made plans to protect them. How would they declare “that they are illegal migrants”? If they did, they would lose their careers, marriages would end, their homes will be taken away, they would be arrested. Today, because of the Bill that Narendra Modi has made, they can say, without any fear, ‘Yes, we are refugees. Give us citizenship.’ We have made a provision to give them citizenship with retrospective effect.”

In conclusion, the Act of CAA i.e. Citizenship Amendment Act never aims to divide but to solve the genuine problem of the divide that was made in 1947 of partition. Narendra Modi is aiming to take India to a successful level of grounds and building India as the developed country of the world. Support the act with positive changes never think that act violates article 14 as it is creating the comfort zone for all the people living in the country.

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