Now Time has come to be ready to file income Tax return for the Assessment Year 2020-21, however there are lot of changes have been made by the Government.
Some changes are more important to know because Income tax Return cannot be filed correctly if are ignorant of these.
I am just making an effort to cover such amendments/changes in a series like what would be Tax Rate for the Assessment year , changes in particular source of income i.e.salary, house property, Business or profession, capital etc.
First part is on the rate of tax applicable for the Assessment year 2020-21:-
I. RATE OF TAX:
- Individuals, HUFs, Association of Persons, Body of Individuals, Artificial Jurisdictional Person.
Tax Slab and rates:
|
TOTAL INCOME |
Individuals (Age < 60 years), HUFs, AOP, BOI Or AJP |
Senior Citizen Individuals |
Super Senior Citizens Individuals |
|
Upto ₹ 2,50,000/- |
NIL |
— |
— |
|
Upto ₹ 3,00,000/- |
— |
NIL |
— |
|
₹ 2,50,001/-
to |
5% |
— |
— |
|
₹ 3,00,001/-
to |
— |
5% |
— |
|
Upto ₹ 5,00,000/- |
— |
— |
NIL |
|
₹ 5,00,001/-
to |
20% |
20% |
20% |
|
Above ₹ 10,00,000/- |
30% |
30% |
30% |
• Rebate u/s. 87A for a Resident Individual:
If the total income of a resident individual does not exceed ₹ 5,00,000/- then such individual shall be allowed deduction from the income tax payable of upto ₹ 12,500/- or the amount of tax payable, whichever is lower.
• Rate of Surcharge to be applied on the amount of Income Tax:
|
Particulars |
Total Income |
Rate |
|
Surcharge on income – Capital Gains taxable u/s. 111A, 112A &115AD(1)(b) – Income taxable u/s.115BBE |
Exceeds ₹ 50 Lakhs but less than ₹ 1 Crore |
10% |
|
Exceeds ₹ 1 Crore but less than ₹ 2 Crore |
15% |
|
|
Exceeds ₹ 2 Crore but less than ₹ 5 Crore |
25%* |
|
|
Exceeds ₹ 5 Crore |
37% * |
|
|
Surcharge (on Income chargeable u/s. 115BBE) |
Any Sum |
25% |
|
*Note: The enhanced surcharge of 25% & 37%, as the case may be, is not levied, on income chargeable to tax u/s. 111A, 112A and 115AD. Hence, the maximum rate of surcharge on tax payable on such incomes shall be 15%. |
||
• The health and education cess is levied at the rate of 4% on the amount of income tax plus surcharge
- Co-operative societies.
|
Total Income |
Rate of Tax |
Surcharge & Cess |
|
Upto ₹ 10,000/- |
10% |
Surcharge will be levied on the income tax @12% if total income exceeds Rs. 1Crore |
|
₹ 10,001/- to ₹ 20,000/- |
20% |
The health and education cess is levied at the rate of 4% on the amount of income tax plus surcharge |
|
exceeds ₹ 20,000/- |
30% |
- Partnership Firms, LLP and Local Authority
Flat rate of tax @ 30% of the total income. If total income exceeds ₹ 1 crore, then surcharge will be levied @ 12% on the amount of tax payable on total income.
The health and education cess is levied at the rate of 4% on the amount of income tax plus surcharge
- Companies
➤ Domestic Companies:
• Various Tax Options:
|
Section |
Important Conditions |
Rate of Tax |
|
|
115BA |
a) |
The company is set up and registered on or after 01/03/2016 |
25% |
|
|
a) |
The company is not exercising option u/s. 115BAA or 115BAB. |
|
|
|
b) |
It is engaged in manufacture or production of any article or thing |
|
|
|
c) |
It does not claim specified exemption, incentive or deduction. |
|
|
|
d) |
Option to opt in for this section should be exercised by filing the declaration in Form No. 10-IB on or before the due date of filing Return of Income as specified in Section 139(1). |
|
|
e) |
Once the option has been exercised under this section then it cannot be subsequently withdrawn for the same or any other assessment year, except for opting for section 115BAA. |
||
|
115BAA |
a) |
Domestic company not opting for Section 115BA or Section 115BAB can opt for this Section. |
22% |
|
b) |
It does not claim specified exemption, incentive or deduction. |
||
|
c) |
Option to opt in for this section should be exercised by filing the declaration in Form No. 10-IC on or before the due date of filing Return of Income as specified in Section 139(1). |
||
|
d) |
Once the option has been exercised under this section then it cannot be subsequently withdrawn for the same or any other assessment year. |
||
|
115BAB |
a) |
The company is set up and registered on or after 01/10/2019. |
15% |
|
b) |
The company is not exercising option u/s. 115BA or 115BAA. |
||
|
c) |
It is engaged in manufacture or production of any article or thing and is not engaged in any other business. |
||
|
d) |
It commences manufacturing on or before 31-03-2023 |
||
|
e) |
It is not formed by splitting up or reconstruction of existing business and does not use second hand machinery or plant and does not use a building previously used as a hotel or convention centre in respect of which deduction under section 80ID has been claimed and allowed. |
||
|
f) |
It does not claim specified exemption, incentive or deduction. |
||
|
g) |
Option to opt in for this Section should be exercised by filing the declaration in Form No. 10-ID on or before the due date of filing Return of Income as specified in Section 139(1). |
||
|
h) |
Once the option has been exercised under this section then it cannot be subsequently withdrawn for the same or any other assessment year. |
||
|
i) |
Where the total income includes income which is not derived or incidental to manufacturing or production of an article or thing and for which separate rate of tax in not specified then the rate of tax on such income shall be 22% on gross basis. |
||
|
|
j) |
Where course of business between company opting for this section and any other person are so arranged that it produces to the company more than the ordinary profits, the assessing officer can re-compute the profit which may be reasonably deemed to have been derived therefrom. Rate of Tax on such excess income derived by assessing officer shall be 30%. |
|
|
k) |
Rate of Tax in case of short term capital gain arising from transfer of capital asset on which depreciation is not allowable, will be 22% of such gains. |
||
|
First Schedule to Finance Act |
If total turnover or gross receipts during the financial year 2017-18 does not exceed ₹ 400 crore |
25% |
|
|
First Schedule to Finance Act |
Any other domestic company |
30% |
|
• Surcharge on Income Tax:
|
Company covered by |
Total Income |
||
|
|
Upto ₹ 1Crore |
Exceeds ₹ 1 Cr. but is Upto ₹ 10 Cr. |
Exceeds ₹ 10 Cr |
|
Section 115BA |
Nil |
7% |
12% |
|
Section 115BAA* |
10% |
10% |
10% |
|
Section 115BAB* |
10% |
10% |
10% |
|
Other Domestic company |
Nil |
7% |
12% |
(*) The rate of surcharge in case of a company opting for taxability under Section 115BAA or Section 115BAB shall be flat 10%, except on that part of total income which is chargeable to tax u/s. 115BBE of the Income Tax Act, 1961, where the rate of surcharge is 25% of the income tax.)
• The health and education cess is levied at the rate of 4% on the amount of income tax plus surcharge
➤ Foreign Companies:
- A foreign company is liable to pay tax at the rate of 40% of total income.
- The rate of surcharge:
- 2% If Total Income exceeds Rs. 1 Crore but is upto Rs. 10 Crore
- 5% If Total Income exceeds Rs.10 Crore
- The health and education cess is levied at the rate of 4% on the amount of income tax plus surcharge.
MINIMUM ALTERNATE TAX (MAT)
• MAT is not applicable in case of following Companies:
– A domestic company which has opted for Section 115BAA (22% Tax Rate)
– A domestic company which has opted for Section 115BAB (15% Tax Rate)
– Foreign company which is a resident of a country or a specified territory with which India has an agreement referred to in section 90(1) or section 90A(1) and the assessee does not have a permanent establishment in India.
– Foreign company which is a resident of a country with which India does not have such an agreement and the assessee is not required to seek registration under any law for the time being in force relating to companies.
– Foreign companies whose total income consists solely of income referred to in Section 44B, Section 44BB, Section 44BBA or Section 44BBB.
– Income accruing or arising to a company from life insurance business as referred to in Section 115B
• Rate of MAT under Section 115JB is reduced from 18.5% to 15% by Taxation Laws (Amendment) Ordinance, 2019
• Rate of MAT under Section 115JB is 9% in case of Domestic Company located in International Financial Service Centre.
ALTERNATE MINIMUM TAX (AMT)
Rate of AMT is unchanged @ 18.5% on the adjusted total income. However, for the assessee located in International Financial Service Centre it shall be 9%. Further, if a person has exercised the option under section 115BAA, then AMT will not be leviable on him.