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NASSCOM’s analysis of the Union Budget 2020-21

Blog: NASSCOM Official Blog

Key wins 

Economic Snapshot 

Global economic slowdown and challenges in the domestic financial sector moderated the growth of Indian economy to 5.0 % in 2019-20 compared to 6.8 % in 2018-19. This moderation has had its impact on the Government finances. Against a budget estimate of 3.5% of the GDP for 2019-20, the fiscal deficit has been revised to 3.8% of GDP.

For year 2020-21, the GDP growth is estimated at 6-6.5%. The government has chosen to go for an expansionary budget and has budgeted a fiscal deficit of 3.5% for 2020-21. A good part of the borrowings would go towards capital expenditure. Around ₹22,000 crore have been allocated for equity to fund certain specified infrastructure finance companies.



Taxation of Digital Economy 

Transfer pricing 

IT – BPM & Electronics manufacturing sector 

Technology Adoption 

Investment Facilitation 

Tax Administration

Summary of key measures that were not addressed

Some of the NASSCOM suggestion that were not addressed in the Union budget 2020-21 are listed below:

  1. Extension of reduced corporate tax rate of 15% to newly incorporated companies in the Special Economic Zones (SEZs).
  2. Extension of sunset clause under section 10AA of Income Tax Act for another 5 years.
  3. Extension of weighted deduction of 150% beyond financial year 2020-21 u/s 35(2AB) and include “IT/ ITeS” as eligible business for the purpose.
  4. Allow deduction under section 80JJAA to taxpayers having income from profession. Further, threshold of total emoluments should be increased from INR 25,000 per month to at least INR 50,000 per month.
  5. Long Term Capital Gains (LTCG) for all assesses (i.e., residents as well as non-residents) arising from sale of shares of unlisted companies should be taxed at uniform rate.

As per section 80-IAC of Income Tax Act, “eligible start-up” means a company or a limited liability partnership engaged in eligible business which fulfils the following conditions, namely:—

  1. it is incorporated on or after the 1st day of April, 2016 but before the 1st day of April 2021;
  2. the total turnover of its business does not exceed INR 25 crores in the previous year relevant to the assessment year for which deduction under sub-section (1) is claimed; and
  3. it holds a certificate of eligible business from the Inter-Ministerial Board (IMB) of Certification as notified in the Official Gazette by the Central Government.

The post NASSCOM’s analysis of the Union Budget 2020-21 appeared first on NASSCOM Community |The Official Community of Indian IT Industry.

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