Changes of Income Taxes 2020
Finance Act 2020 has already been passed and the changes will impact in the financial year 2020-21. The major changes of income taxes 2020 through Finance Act 2020 are divided into three parts which are discussed one by one.
The major changes of income taxes for individual taxpayers are increase the tax-free limit from BDT 2.5 lakh to BDT 3 lakh. And the starting tax rate reduced to 5% from 10%. Slab wise tax rates also changed through Finance Act 2020.
Area of TIN registration has been extended, now the Zilla Parishad Chairman and Vice-chairman, participates in a shared economic activity by providing motor vehicle, space, accommodation or any other assets and obtaining or maintaining a license for arms shall have to collect TIN certificate.
Another big change is that all of the TIN holders shall have to file tax return except an individual assessee who has no taxable income but require to have TIN for selling a land and for obtaining a credit card. To ease of tax filing by these TIN holders, a single page tax form has been introduced this year.
You may learn from the below video about new single page return form.
Company tax rate mostly remain unchanged except non-publicly traded company for which tax reduced by 2.5% to 32.5%.
Tax deducted/collected at source has been changed in several areas. Each year after Finance Act, we publish full TDS, VAT and SD rates including VAT exempted goods and services. This year we have published PDF version handbooks.
You may visit the respective post and download free version of Handbook: TDS Rates FY 2020-21 including section references, Handbook: VAT Rates FY 2020-21 with H.S. Code, Handbook: Supplementary Duty (SD) Rates FY 2020-21 with H.S. Code and Handbook: VAT Exempted Goods and Services FY 2020-21.
You may watch the below video to learn more about salient features of corporate tax changes through Finance Act 2020.
Value Added Tax (VAT)
Advance tax has been reduced on imported raw materials for manufacturing industries from existing 5% to 4% but 5% remain unchanged for other cases. The time limit for the input tax credit has been extend upto 4 tax periods from existing 2 tax periods and another change is that input tax credit facility has been extended 80% of the expenditure incurred on transportation services will be considered as input credit.
A new SRO 149 has been issued on 11 June 2020 which will be applicable from the first day of upcoming financial year 2020-21. The existing SRO 187 will be deleted from the same day. As per new SRO 149, the withholding areas will be changed which includes certain services.
An amendment of the law has been made to authorise the NBR to extend time limit for tax filing to avoid fine and interest during the period of epidemic, pandemic or natural calamities. Another new provision has been made to consider the next working day as the deadline for the VAT return submission if the 15th day becomes a public holiday.
You may also watch the below video to know everything about VAT and SD major changes by Finance Act 2020.