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India Gazettes Law For Budget Tax Changes

Thursday, August 8, 2019

India has published in its Official Gazette legislation to give effect to tax announcements in the 2019-20 Budget.

The Indian Government announced in its July 5 Budget that the scope of the lower 25 percent corporate income tax rate will be expanded to cover 99.3 percent of Indian businesses. The Finance (No. 2) Act, 2019, hikes the threshold for access to the concessionary corporate tax rate to INR4bn from INR2.5bn (USD36.5m).

Other salient tax measures in the Budget included an enhanced interest deduction of up to INR350,000 for the purchase of an "affordable house"; the launch of a new dispute resolution service to resolve legacy service tax and excise duty-related disputes; confirmation there will be a single monthly GST return along with other administrative simplifications; and confirmation that India will roll out an electronic invoice system, to eventually replace the e-way bill system and enable returns to be pre-filled.

The Budget also announced a new income tax deduction for those purchasing electric vehicles with loans. This follows on from the GST Council's approval of a reduced five percent rate of GST on electric vehicle purchases, down from 12 percent.

The law will extend, until March 31, 2021, the exemption from capital gains tax on gains arising from the sale of a residential house where the capital is used to invest in a start-up and relax the eligibility conditions.

The Budget also included proposed changes to the Securities Transaction Tax in relation to options, to restrict the tax basis for options to the difference between the settlement and strike price.