Page 24 - Budget_2020

Union Budget 2020
Miscellaneous Provisions
Carry Forward of Losses or Depreciation in Certain Amalgamations
It is proposed to extend the benefit of carry forward of losses and accumulated depreciation u/s 72AA, to
amalgamation of:
 One or more corresponding new bank (body corporate specified against existing bank) with another
corresponding new bank or
 One or more Government general insurance company or companies with any other Government general
insurance company

AY 2020-21 and subsequent AYs

The proposed amendment will address the issue faced by the amalgamated public sector banks and public
sector General Insurance Companies.

Definition of “Business Trust” – to Include Private Unlisted Trusts
Business trusts enjoy the pass-through status under the Act, which includes Real Estate Investment Trusts and
Infrastructure Investment Trusts (InvITs).

Further, the regulations under SEBI has removed the mandatory listing requirement for InvITs
To amend clause (13A) of Sec 2 to modify the definition of “Business trust” so as to do away with the
requirement of the units of business trust to be listed on a recognised stock exchange

AY 2021-22 and subsequent AYs

The above proposal shall provide the same status for both private unlisted InvITs and public listed InvITs

Rationalization of Tax Treatment of Employer’s Contribution to Retirement Funds
 To provide a combined upper limit of Rs 7,50,000 in respect of employer's contribution in a year to
National Pension Scheme, Superannuation Fund and Recognised Provident Fund and any excess
contribution is proposed to be taxable
 Employer’s contribution to these funds is taxable in the hands of employee. Thus, it is proposed to provide
the taxability of interest, dividend or any sum of similar nature, accreted on these funds to the extent it
relates to employer’s contribution

AY 2021-22 and subsequent AYs

The above proposals shall curb the benefit given to employees earning high salary income and entail employers
to contribute to these funds for a large part of low salaried employee salary. However, given the fact that we
as a nation require, long term savings, the increased deduction for a very small portion of the population could
have been spared in the larger interest of long-term savings. It is noteworthy to mention that our domestic
savings to GDP ratio has progressively reduced from around 34% in 2010 to around 29% in 2018

Modification of Residency Provisions
 Any person becomes a resident of India if:
- Stay in india exceeds 182 days during the FY or
- 60 days in the FY and 365 in the 4 preceding FYs
 However, exception is provided where, the following persons become resident ONLY if they have stayed
in India for 182 days:
- An Indian citizen, being a crew member of an Indian ship
- An Indian citizen travels abroad for the purpose of employment outside India
- Indian citizen, being a person of Indian origin and being outside India, visits India
 Further an individual shall be regarded as not ordinarily resident if he is-
- Non-resident in 9 out of 10 preceding years or
- During 7 preceding years, stayed in India for 729 days or less
 An HUF, is a not ordinarily resident, if these conditions are fulfilled by its manager/karta

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