Business Owner’s Union Budget 2020 – Suggestions and Expectations

The business community is looking forward to the Union Budget 2020 to provide some relief in the current economic slowdown. Our team of CFOs have shortlisted the below mentioned 4 points as the most important expected announcements and suggestions:

1. Reduced rate of Tax for LLP & Partnership firm

Tax rates for corporates are reduced to 25%. LLPs and partnership firms are presently taxed at 30%. In the interest of fairness, It is important to bring parity in taxes among different kind of entities.

Expectation: Tax Rates of LLPs, partnership firms & AOP to be reduced to 25%.

2. Abolition of Dividend Distribution Tax

Dividend distribution tax is around 20%. With the introduction of 10% tax in hands of shareholders, for dividend in excess of 10 lakhs, it leads to double taxation.

Expectation: Dividend distribution tax should be abolished and dividend should be taxed as normal income in hands of the recipient.

3. Allowance of CSR Expenditures

Corporate social responsibilities (CSR) is mandated under the Companies Act,  2013. Companies need to spend 2% of average profits towards social causes. This expenditure is not allowed as an expense under the Income Tax Act.

Suggestions: 100% deduction should be allowed for CSR expenditure as it is mandated by the Companies Act, 2013.

4. Angel Investment to be Considered as per listed investment

Angel Investment is needed to boast start-ups and create an ecosystem of entrepreneurship. However, capital gains to angel investors do not enjoy lower tax rates as capital gains in Listed shares.

Suggestions: Angel Investment should be treated as per with investment in listed Shares for taxation purpose.

Share your suggestions by commenting on the post.