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Consider the following statements with reference to taxation in Budget 2020.

1. Dividend Distribution Tax (DDT) was abolished.

2. Tax on cooperative societies was to be reduced to 22% plus surcharge and cess as against 30% at present.

Which of the statements given above is/are correct?


1. Only 1
2. Both 1 and 2
3. Neither 1 nor 2
4. Only 2

1 Answer

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Best answer
Correct Answer - Option 2 : Both 1 and 2

The correct answer is Both 1 and 2.

  

  • Taxation in Budget 2020
    • Tax on cooperative societies was to be reduced to 22% plus surcharge and cess as against 30% at present. Hence statement 1 is correct.
    • Dividend Distribution Tax (DDT) was abolished. Hence statement 2 is correct.

  • Changes in Taxation
    • Dividend Distribution Tax (DDT) removed.
      • Instead of companies paying DDT on the dividend they give out, the dividend income will now be added to the taxable income of the recipient and taxed at the applicable rate.
    • Income Tax
      • New tax slabs and lower income tax rates.
        • Around 70 of the existing exemptions and deductions to be removed in the new simplified regime.
      • New tax regime to be optional - an individual may continue to pay tax as per the old regime and avail deductions and exemptions.
    • Corporate Tax: Concessional corporate tax rate of 15% to new domestic companies in the manufacturing and power sector.
    • 5% health cess to be imposed on imports of medical equipment given these are made significantly in India.
    • Issuance of Unique Registration Number to all charity institutions for easy tax compliance.
    • ‘Vivad Se Vishwas’ scheme, with a deadline of 30th June 2020, to reduce litigations in direct taxes.
    • 100% tax exemption to the interest, dividend and capital gains income on the investment made in infrastructure and priority sectors before 31st March 2024 with a minimum lock-in period of 3 years by the Sovereign Wealth Fund of foreign governments.

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