New Laws Introduced by the Indian Government to Ease Taxpayers’ Burden

On July 28, 2019, the Indian Government introduced the Finance Bill, 2019, which aimed to amend various laws related to taxation in the country. The bill brings significant changes to the taxation system, with the aim of easing the burden on taxpayers and promoting compliance. The law came into force on September 1, 2019, and affects both individual and corporate taxpayers. In this article, we will discuss the key amendments introduced by the new law and its implications for taxpayers.

Introduction of New Tax Regime

One of the major changes brought by the Finance Bill, 2019 is the new tax regime, which provides for lower tax rates for individuals, but without any deductions or exemptions. Under this new regime, taxpayers can choose to pay taxes at a lower rate of 5%, 10%, or 15% depending on their income, without claiming any deductions or exemptions. This will greatly simplify the tax filing process for individuals and encourage them to comply with tax laws.

Changes in Tax Rates for Companies

The new law also brings changes in tax rates for companies, with the aim of promoting investments and boosting economic growth. The tax rate for domestic companies has been reduced from 30% to 22%, while for new manufacturing companies it has been reduced to 15%. Additionally, startups with an annual turnover of up to Rs. 100 crore can now avail a tax holiday for three consecutive years out of the first ten years of their establishment. This will provide a much-needed boost to the startup sector and promote entrepreneurship in the country.

Expanding the Scope of Angel Tax Exemption

In order to address the concerns of the startup community and to promote investments in Indian startups, the Indian Government has also expanded the scope of angel tax exemption. As per the new law, startups that have been registered with the Department for Promotion of Industry and Internal Trade (DPIIT) can avail the angel tax exemption, provided they fulfill certain conditions. This move will encourage investments in startups and foster growth in the sector.

Measures to Simplify GST Compliance

In an effort to streamline the Goods and Services Tax (GST) compliance process and reduce the burden on taxpayers, the Finance Bill, 2019 has introduced various measures. One of the major changes is the simplification of the GST registration process for new businesses, which will now be done through a single form. Additionally, small businesses with an annual turnover of up to Rs. 5 crore can now file quarterly returns instead of monthly returns, which will greatly reduce their compliance burden.

Relaxation in Taxation for Buyback of Shares

Under the previous tax regime, companies were required to pay tax on the amount paid to shareholders during the buyback of shares. However, with the new law, listed companies will no longer be required to pay a tax on buyback of shares, in order to promote investments in the stock market. This will provide relief to both companies and shareholders, as the buyback of shares will be more lucrative for shareholders and will not be a cost for companies.

Repeal of Surcharge on Capital Gains

Another significant change brought by the Finance Bill, 2019 is the repeal of surcharge on capital gains. Under the previous tax regime, individual taxpayers earning over a certain threshold were subject to a surcharge of 15% on capital gains. This surcharge has now been abolished, providing relief to taxpayers and making investments in the stock market more attractive.

Conclusion

The Finance Bill, 2019 introduces significant changes to the taxation system, with the aim of easing the burden on taxpayers and promoting compliance. The new tax regime, changes in tax rates for companies, angel tax exemption, measures to simplify GST compliance, and relaxation in taxation for buyback of shares are some of the key amendments that will have a positive impact on taxpayers. By promoting investments and reducing the compliance burden, the Indian Government has demonstrated its commitment to creating a favourable business environment in the country.