Page 13 - Budget_2020

Union Budget 2020
Expansion of Scope of Form 26AS
With the advancement of technology and to facilitate compliance, information in relation to sale/ purchase of
immovable property, share transactions, etc. should be provided to the assessee in Form 26AS so that the same
can be used for the purpose of filing returns
Remove Sec 203AA and introduce a new Sec 285BB to mandate the prescribed authorities to upload in 26AS
required details in prescribed manner, which is in the possession of an income-tax authority, within such time
as may be prescribed

1st June, 2020

The proposal is in line with the Government’s vision of pre-filled returns and maximizing data collection.

Amending Definition of “Work” u/s 194C
Sec 194C provides for TDS on contractual payments. “Work” u/s 194C excludes manufacturing as per the
specification of customer using materials purchased from third party, other than customer
Scope of work has been expanded to provide that in contract manufacturing, the raw material provided, even

by the associate of assessee, shall tantamount to “work”
Associate shall be a person as defined u/s 40A(2)(b)

AY 2020-21 and subsequent AYs

The amendment is a response to decided judicial precedents; however, including materials within the value of
work seem to be far-fetched and definitely warrants a re-think.

Deferment of ESOP Taxation for Start-ups
A portion of ESOPs are taxed as perquisites as and when the option of vesting is exercised. ESOPs play a
pivotal role in development of start-ups as it can retain highly talented employees.
Tax on ESOPs provided by startups (referred in Sec 80-IAC), shall be deducted and paid within 14 days —
(i) after the expiry of 48 months from the end of the relevant AY i.e 60 months from vesting year; or
(ii) from the date of the sale of such ESOP by the assessee; or
(iii) from the date of which the assessee ceases to be the employee of the person;
whichever is the earlier, on the basis of rates in force of the FY in which the said ESOP is allotted or transferred
The above amendment shall be applicable even in case of TDS on such income and for notice of demand u/s
156
1st April 2020

This is a welcome step as many startups use ESOPs as one of the most favoured option to retain and attract
top talent. Deferring the event of taxation by upto 5 years is a great gesture in the right direction.

Reviving the Provision of TDS u/s 196A (TDS on Dividend)
Provisions of Sec 196A were applicable only till 1st April, 2003

To provide that any person responsible for paying a non-resident any income in respect of units of mutual
funds issued by a specified company shall deduct TDS @ 20%.
The above provisions shall not apply in case of non-resident individuals or non-resident HUFs which had
acquired such units out of funds in NRE account in India as per FEMA regulations

1st April, 2020

This is a consequential amendment post abolition of dividend distribution tax.

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