We are pleased to present the latest edition of Tax Street - our newsletter that covers all the key developments and updates in the realm of taxation in India and across the globe for the month of December 2020.
- The 'Focus Point' captures the significant movements in the taxation arena in 2020 and the expectations from the 2021.
- Under the 'From the Judiciary' section, we provide in brief, the key rulings on important cases, and our take on the same.
- Our 'Tax Talk' provides key updates on the important tax-related news from India and across the globe.
- Under 'Compliance Calendar', we list down the important due dates with regard to direct tax, transfer pricing and indirect tax in the month.
We hope you find our newsletter useful and we look forward to your feedback. You can write to us at email@example.com. We would be happy to hear your thoughts on what more can we include in our newsletter and incorporate your feedback in our future editions.
Moving from 2020 - A Year of Challenges to 2021 - A Year of Hope and Revival
There is a past which is gone forever, but there is a future which is still our own" Fredrick William Robertson
2020 will go down as a challenging year that shaped the economy for years to come. Set against the backdrop of a pandemic that encouraged social distance, the businesses were lead on a difficult path dotted with economic strain and financial troubles. The global economy crawled as the supply chain was interrupted due to the lockdowns. India has also borne the brunt of this pandemic, and while the situation may improve, the after-effects on the economy are still unprecedented. As it is rightly said, "it is the destruction after the storm, which is more difficult to revive than surviving the storm."
While presenting the previous budget, the government had a vision of turning India into a USD 5 trillion economy. However, the pandemic seems to have made that goal even harder to achieve. All eyes are set on the finance minister as we head towards union budget 2021, which will set the tone for the economic revival for the decade to come. The budget is not just expected to provide new opportunities but also to handhold those who have suffered due to the pandemic.
Even before the pandemic struck us, India's economy was slowing down, and the government had implemented a few unprecedented changes in the law for the Make in India project and taxing the digital economy. There were also a few key amendments in the GST and Customs law.
We have discussed below some of the major tax changes in 2020:
Changes made in 2020
Concessional new corporate tax regime:
- The corporate tax rate for manufacturing company was reduced to 15% whereas for other domestic companies was reduced to 22%;
- The companies opting for the new regime have to give up on certain deductions/incentives.
This change would have a huge impact on the Make in India campaign as many MNC/Indian corporates would look at setting up a manufacturing facility in India.
Dividend Distribution Tax (DDT) was abolished:
- DDT on the dividend distributed by domestic companies was abolished, shifting the tax onus on the shareholder;
- Foreign companies/Non-residents liable to be taxed at 20% or the treaty provision for dividend
This move would help especially foreign promoters/ companies to avail concessional rate for dividend taxation under the Tax Treaty as against the DDT of 20%.
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