Budget 2019 was announced in two parts last year as there was election. Last year major amendments were made to Income tax regarding Corporate Tax. However now with this being the First full budget by the government it is assumed that there are going to be huge announcements being made for Individuals and other assessee’s.
Budget 2020, will be announced on 1st February, 2020. It is expected that this budget will focus on trying to bring policies which boost the economy as the growth in the last quarter was not sufficient.
Some of the other major other expectations of people are:
- Reduction in the tax rate of individuals, HUF, partnership firm and LLP.
- Increase in the amount of deduction u/s 80C.
- Increase in the deduction of interest on housing loan u/s 24.
- Reduction in tax rate u/s 115BBE which deals with addition u/s 68 to 69D.
- Removal or simplifying the law to get accounts audited for 5 years u/s 44AB if a person tries to opt out of section 44AD, which is confusing more rather than simplifying things.
I doubt that there will be any drastic reduction in tax rates considering the government is not able to meet its budget targets for GST and Direct tax and because of which we can see government taking adverse steps. You can read some of which in our post HERE.
We have even shared with you the Memorandum of budget made by ICAI which you can read.
We generally don’t share or discuss rumors on our website but since its very important for each professionals we decided to atleast share it with you all.
News are coming where it has been said that there are chances of government scrapping the Audit u/s 44AB. Currently the turnover limit for tax audit u/s 44AB is 1 crore for business and 50 lakh for professionals and if a person opts out of 44AD scheme i.e. show profit under 8% or 6% then he needs to get his accounts audited. However, now it being said strongly that government is planning on removing the requirement of tax audit. The various reasons based on which such speculations are being made is as under:
- The required information can be furnished by the assessee himself in the ITR. There are enough penal consequences if the taxpayers do not comply with the provisions of the Income Tax Act or submit the false or wrong information. Taking the information from the auditor can be compensated by the same information from the assessee himself.
- The most of the column in the audit reports are just compilation of the information only which assessee is otherwise also required to furnish in the ITR.
- Audit is an additional compliance burden on the assessee.
- That the quality of audit reports have been degrading and section 271J was introduced to ensure that the audit report do not contain wrong information and errors.
- Audit provision u/s 44AB was introduced when the accounting system was manual and the third party audit was ensuring the authenticity of the books of accounts and records thereto. Now, the books mostly are computerized and the third party information is also available in digitalized format.
If the tax audit provision u/s 44AB is taken away, it will be the biggest loss of revenue for the CA fraternity where major revenue chunk is expected from tax audit and GST Audit.
However we don’t think its possible to scrap such an important provision like that because many things are dependent on such audit like: tenders, bank loan, GST audit etc and it wont be easy to just scrap it like that and it’s a true fact that many people are surviving in this profession because of Tax audit.
Let’e wait and see what the Budget has for us.
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