Changes in ITR due to Income tax Ordinance 2019.

With an intent to promote growth and investments, the Government has brought in  The Taxation Law (Amendment) Ordinance, 2019 which was published in the official gazette on 20th September 2019.

On 20th September 2019 following major changes in income tax were brought in by, Change is Corporate Tax Rate, Change in Rate of Depreciation and relief in rate of MAT (Minimum Alternate Tax)

Change in Depreciation - For Motor Vehicles other than those used in business of running them on Hire the rate of depreciation was raised from previous 15% to 30%.And the rate increased from 30% to 45% on Lorries, Buses used in the business of running them on hire. Condition : The higher rate of depreciation is only in respect of assets acquired on or after the 23rd day of August, 2019 but before the 1st day of April, 2020 and should be put to use. This is very interesting point. It can also be used for tax planning.

Change in MAT Rate- Current rate of MAT of 18.5 percent plus surcharge and cess has been reduced to 15 percent plus surcharge and cess w.e.f assessment year 2020-21 onwards. 

Change in Corporate Tax Rate: Two new sections, 115 BAA and Section 115BAB were brought in to reduce corporate tax Rate on companies which do not claim specified deduction and losses arising on account of such deduction.

Specified Deduction: Following not to included while computing total income-

1. Additional deprecation will not be allowed however normal depreciation u/s 32 will be allowed in the prescribed manner.
2. Further Deduction under Chapter VI A- Chapter C is not allowed except for Sec 80JJAA in respect of additional employment.
3. Business Loss carried forward on account of above two will not be allowed.

Section 115BAA: Domestic company can opt for a lower rate of tax of 22 percent plus surcharge and cess for AY 2020-21 onwards. MAT shall cease to apply on such companies.

Section 115BAB: Domestic manufacturing company can opt for a lower rate of tax of 15 percent plus surcharge and cess for AY 2020-21 onwards. Such company shall be incorporated on or after 1st October 2019. MAT shall cease to apply on such companies.

But there is a googly here, a flat Surcharge of 10% levied on companies under section u/s 115BAA and 115BAB irrespective of the income of the company.