Page 9 - Budget_2020
P. 9

Union Budget 2020
                                  Profits and Gain from Business or Profession
                                               Deduction u/s 35AD is Optional

                          Sec 35AD, provides for 100% deduction for capital expenditures by specified business. Currently, it seems
                          mandatory to avail incentive under this section for specified businesses.

                          Amend Sec 35AD to make it optional.
                          Further, it is proposed that deduction of capital expenditure shall be denied under any other section only if the
                          deduction is claimed by the assessee and it is allowed under this section

                          AY 2020-21 and subsequent AYs

                          This amendment has been proposed to clarify a possible interpretation issue whereby it seemed mandatory to
                          opt for deduction u/s 35AD, failing which the assessees would be denied deduction in the normal course.

                    Allowing Deduction for Amount Disallowed u/s 43B, to Insurance Companies on Payment Basis

                          Sec 43B allows certain expenses only if they are paid within the due date for filing tax returns. For payments
                          beyond the due date - deduction shall be allowed in the year of payment.

                          There was ambiguity in applying the above provision to insurance companies, which is now being clarified.

                          AY 2020-21 and subsequent AYs

                                Extension of Concessional Tax Regime for Generation of Electricity
                          Various stakeholders requested to provide the benefit of the concessional rate of 15% u/s 115BAB to business
                          of generation of electricity.

                          Scope of the benefit shall include companies engaged in generation of electricity

                          AY 2020-21 and subsequent AYs

                          The above proposal would foster the generation of electricity which is imperative for all the sectors of the
                          economy. In the last 5 years, the electricity generation has increased from 1048.67 billion units in 2014 to
                          1249.34 billion units in 2019. However, it shall be noted that the benefit is extended only to power generation
                          companies and not distribution entities.

           Power Supply Position of India
                                      Peak                                          Energy
                                                    Surplus(+)                                     Surplus(+)
            Year      Demand        Availability       or          Requirement      Availability       or
                       (MW)           (MW)          Deficit(-)       (MU)             (MU)          Deficit(-)
                                                   MW     %                                       MU      %

           2019-20    189951          205870      15919  8.38%      1394904          1475292      80388  5.76%
           2018-19    177022          175528      -1494  -0.84%     1274595          1267526      -7069  -0.55%
           2017-18    164066          160572      -3494  -2.13%     1213325          1204697      -8628  -0.71%
           2019-20 are projected values.
           MW = Megawatt; MU = Million Units = 1000 MWs
           Source: Central Electricity Authority

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