fbpx

India's Finance Bill 2020 Amendments Update

In continuation to sharing the key highlights of the Union Budget 2020 presented on February 01, 2020, we wish to update you that the Lok Sabha passed the Finance Bill 2020 on March 23, 2020. In the Finance Bill now cleared from the Parliament, certain proposals earlier announced in February has been amended. The key amendments have been summarised as below:


Amendment in Residency Provision

Original proposal

  • The period of stay in India triggering residency for an Indian citizen or a Person of Indian Origin who being outside India comes on a visit to India reduced from 182 days to 120 days;
  • An Indian citizen would be deemed to be an Indian resident if such individual is not liable to tax in any other country or territory;
  • A resident individual shall be considered not ordinarily resident in India if the person is a non-resident in 7 out of 10 previous y

Amended Proposal

  • The period of stay in India triggering residency for an Indian citizen or a Person of Indian Origin who being outside India comes on a visit to India reduced from 182 days to 120 days where such person has income from sources other than foreign sources exceeding INR 1.5 million (~USD 20,000). For others the 182 days limit has been restored;
  • Further, the person as aforesaid breaching the 120 days threshold but stay in India is below 182 days will be considered resident but nor ordinarily resident;
  • An Indian citizen would be deemed to be a resident but nor ordinarily resident if such an individual is not liable to tax in any other country or territory and has income from sources other than foreign sources exceeding INR 1.5 million (~USD 20,000).

New provision for Equalisation levy on E-commerce Supply or service

Original proposal

No proposal in the Finance bill presented in February

Amended Proposal

  • The amended Finance Bill has inserted a new provision expanding the scope of Equalization levy. Now Equalization levy of 2% will be applicable on consideration received by e-commerce operator for e-commerce supply/facilitation of goods/service to specified persons;
  • Here E-Commerce operator means a non-resident who owns, operates or manages digital or electronic facility or platform for the online sale of goods or online provision of services or both;
  • It is applicable where the turnover of the E-Commerce operator from specified persons is INR 20 million (~USD 267,000) or more;
  • The Equalization levy is to be paid by the E-Commerce operator on a quarterly basis;
  • The income of such an E-Commerce operator on which Equalization Levy has been discharged shall be exempt.

TDS on Cash withdrawal

Original proposal

No proposal in the Finance bill presented in February

Amended Proposal

  • In the Budget of 2019, a new provision was introduced requiring banking organisations to withhold taxes on cash withdrawals beyond specified limit.
  • It is now proposed to amend this provision to provide for higher tax withholding rate in case the person withdrawing the cash has not filed return of income for three years.

TDS on e-commerce

Original proposal

An e-commerce operator is required to withhold tax @ 1% on payments made to participants selling goods or providing services through the e-commerce platform

Amended Proposal

An e-commerce operator is required to withhold tax @ 1% on payments made to participants selling goods or providing services through the e-commerce platform


TCS on remittances under Liberalised Remittance Scheme (LRS)

Original proposal

  • An authorized dealer bank to collect tax @ 5% in case of foreign remittance under liberalized remittance scheme (applicable to resident individuals) of amount in excess of INR 0.7 million;
  • A tour operator to collect tax @ 5% on sale of overseas tour packages;

Amended Proposal

  • The Government has clarified that the tax collection will apply on amount remitted in excess of INR 0.7 million (~USD 9,300). However there is no limit where the remittance is on account of foreign tour package;
  • Further the tax collection will be @ 0.5% of the amount in excess of INR 0.7 million (~USD 9300), where the remittance is a loan obtained from any financial institution for the purpose of pursuing any education;

The above provisions will apply from 1st October 2020


TCS on Sale of Goods

Original proposal

A seller that has a turnover in excess of INR 100 million (~USD 1.33 million) to collect tax @ 0.1% on consideration received for the sale of goods in excess of INR 5 million (~USD67,000) from a buyer during a year.

Amended Proposal

  • This provision will now not apply in case of import or export of goods;

The above provisions will apply from 1st October 2020


TDS on FTS paid to residents

Original proposal

Withholding tax rate for payment of the fee for technical services to residents reduced from 10% to 2%. No change in withholding tax rate for professional fee payment.

Amended Proposal

The reduced rate of 2% has now also extended to royalty income arising to a person by way of sale, distribution or exhibition of cinematographic films.


Tax exemption to sovereign funds

Original proposal

Tax exemption provided to certain sovereign funds for income in the nature of interest/ dividend/ long term capital gain with regard to debt or equity investment subject to fulfilment of prescribed conditions

Amended Proposal

The proposal has been amended to make it more attractive to foreign funds and the benefits has also been extended to foreign pension funds.


© 2008-2020 Sannam S4 | Sitemap | Privacy Notice