Income Tax Slab & Rates applicable for Financial Year 2020-21

Income Tax Slab & Rates applicable for Financial Year 2020-21 and Assessment Year 2021-2022 for Individuals, Hindu Undivided Family, Partnership Firm, Limited Liability Partnership, Companies, Trust, Co-operative Society and Artificial Jurisdiction Person

A. Individual Tax Slab Rates

Finance Act 2020 has given choice to Individuals & Sole Proprietor Business and Profession to chose between a New Slab Rates or Continue with old Slab rates. The difference is in New Slabs the percentage of taxes are lower on income up to 15 Lakhs, However you have to forgo all deduction, whereas if you continue with Old Slab Rates you can continue to claim all deduction

Option one : New Slab Rates from 1 April 2020

Budget has announced a new tax regime giving tax payers an option to pay taxes as per new tax slabs from FY 2020-21 onwards

Income Tax SlabTax Rate

Up to Rs 2.5 lakhNIL

Rs 2.5 lakh to Rs 5 lakh5%

*Rs 5 lakh to Rs 7.5 lakh10%

Rs 7.5 lakh to Rs 10 lakh15%

Rs 10 lakh to Rs 12.5 lakh20%

Rs 12.5 lakh to Rs 15 lakh25%

Rs 15 lakh and above30%

* Tax rebate of Rs 12,500 available under section 87A)

In order to pay tax under the new scheme the taxpayer has to give up deductions and exemptions. The following are the list of deductions and exemptions that an assessee will have to forgo in order to choose new scheme:

  • Leave travel allowance
  • Conveyance
  • Children education allowance
  • Interest on housing Loan
  • House rent allowance
  • Relocation allowance
  • Daily expenses in the course of employment
  • Profession tax
  • Helper allowance
  • Chapter VIA deduction like 80C, 80D etc
  • Standard deduction

Where the assessee wants to avail the above deduction and exemption then they must pay tax under the old regime

Option two Old Slab Rates from 1 April 2020

Note : The below Income Tax Slab Rates is applicable for all Individual (resident or non-resident) or HUF or Association of Person or Body of Individual or any other artificial juridical person

Taxable IncomeTax Rate

Up to Rs. 2,50,000 Nil

Rs. 2,50,000 to Rs 5,00,000 5%

Rs. 5,00,000 to Rs. 10,00,000 20%

Above Rs. 10,00,000 30%

Less: Rebate under Section 87A [see Note C]

Add: Health and Education Cess [see Note B]

In case of a resident senior citizen (who is 60 years or more at any time during the previous year but less than 80 years on the last day of the previous year) 

Taxable IncomeTax Rate

Up to Rs. 3,00,000 Nil

Rs. 3,00,000 to Rs 5,00,000 5%

Rs. 5,00,000 to Rs. 10,00,000 20%

Above Rs. 10,00,000 30%

Less: Rebate under Section 87A [see Note C]

Add: Health and Education Cess [see Note B]

In case of a resident super senior citizen (who is 80 years or more at any time during the previous year)

Taxable IncomeTax Rate

Up to Rs. 5,00,000 Nil

Rs. 5,00,000 to Rs. 10,00,000 20%

Above Rs. 10,00,000 30%

Less: Rebate under Section 87A [see Note C]

Add: Health and Education Cess [see Note B]

a)  Surcharge:

i)  The amount of income-tax shall be increased by a surcharge at the rate of 10% of such tax, where total income exceeds fifty lakh rupees but does not exceed one crore rupees. However, the surcharge shall be subject to marginal relief (where income exceeds fifty lakh rupees, the total amount payable as income-tax and surcharge shall not exceed total amount payable as income-tax on total income of fifty lakh rupees by more than the amount of income that exceeds fifty lakh rupees).

ii)  The amount of income-tax shall be increased by a surcharge at the rate of 15% of such tax, where total income exceeds one crore rupees. However, the surcharge shall be subject to marginal relief (where income exceeds one crore rupees, the total amount payable as income-tax and surcharge shall not exceed total amount payable as income-tax on total income of one crore rupees by more than the amount of income that exceeds one crore rupees).

iii) The amount of income-tax shall be increased by a surcharge at the rate of 25% of such tax, where total income exceeds two crore rupees but not more than five crore rupees. However, the surcharge shall be subject to marginal relief.

iv) The amount of income-tax shall be increased by a surcharge at the rate of 37% of such tax, where total income exceeds five crore rupees. However, the surcharge shall be subject to marginal relief.

b)  Health and Education Cess: The amount of income-tax and the applicable surcharge shall be further increased by health and education cess calculated at the rate of 4 % of such income-tax and surcharge.

c)  Rebate under Section 87A: The rebate is available to a resident individual if his total income does not exceed Rs. 5,00,000. The amount of rebate shall be 100% of income tax or Rs. 12500 whichever is lower.

B. Rate of Tax applicable for Firms and LLP

Income of Partnership firms and LLP shall be taxable at the rate of 30% followed by 12% surcharge if Net total income exceeds Rs. 1 Crore

The above tax shall be increased by a health and education cess at the rate of 4%

Note: LTCG shall be taxed at 20% and STCG 111A at 15% for firm

C. Rate of tax applicable for Association of Person and Body of Individuals

As per section 167B the following is the rate of tax for AOP/ BOI:

  1. In case the shares of the members are known and if all members are having Net Taxable income is up to basic exemption limit and none of the member is a foreign company then the income is taxed at slab rate
  2. In case the shares of the members are known and if one or more member’s net taxable income is more than basic exemption limit and none of them is foreign company then the tax the entire income at Minimum Marginal rate i.e. 42.744%
  3. In case the shares of the members are unknown then the tax the entire income at Minimum Marginal rate i.e. 42.744%.

Note:

  1. At the time of computing the net total income of member his share from AOP/ BOI is excluded
  2. Loss of AOP/ BOI shall be carry forward by such AOP/BOI only
  3. LTCG shall be taxed at 20% and STCG 111A at 15% for AOP/BOI

D. Tax rate applicable for Companies:

  1. Where the gross turnover is up to Rs. 400 Crore in the FY 2017-18 then tax shall be payable at the rate of 25% on the net taxable payable income
  2. Where the gross turnover is more than Rs. 400 Crore in the FY 2017-18 then tax shall be payable at the rate of 30% on the net taxable payable income
  3. The above tax shall be increased by a health and education cess at the rate of 4% and surcharge as below

Income LimitSurcharge rate on the amount of Income taxNet Income exceeds Rs. 1 Crore but does not exceed Rs. 10 Crore7%Net Income exceeds Rs. 10 Crore12%

Special rates of taxes for Companies:

Section 115BA: 25% of tax in case of certain domestic manufacturing company subject to the other provisions of chapter XII other than section 115BAA & section 115BAB.

It means special rates income taxable as per prescribed rates only. Tax at the rate of 25% is applicable under section 115BA if following conditions are satisfied:

  1. Company has been setup and registered on or after 01/03/2016
  2. Company must be engaged in the business of manufacture or production of any article or things
  3. Company should not have claimed benefit of section 10AA, 32AD, additional depreciation, 33AB, 33ABA, 35AD, 35(1)(ii)/(ii a)/(iii), 35(2AA), 35(2AB), 35CCC, 35CCD & any deduction in respect of income under chapter VI A (i.e. 80IA/ IB etc.) other than provisions of section 80JJAA(Deduction for additional employee cost incurred during the year).
  4. The assessee has to exercise the option up to the due date of return filing
  5. The assessee once exercises this option cannot opt out for the life time but where the person exercises option under section 115BAA, the option under this section may be withdrawn.

Section 115BAA: Tax on income of certain domestic companies (added by the Taxation Laws Ordinance 2019 w.e.f. AY 2020-21)

As per section 115BAA tax at the rate of 25% is charged on Certain domestic company subject to the other provisions of chapter XII other than section 115BA & section 115BAB. The effective rate of tax for this section shall be 25.17% (22+10%+4%) inclusive of surcharge and health and education cess. Companies which opt for section 115BAA shall not be required to pay Minimum alternate tax. If company follows section 115BAA then applicable surcharge rate shall be 10% irrespective of total income.

In order to pay tax at the rate of 22% the following conditions must be satisfied:

  1. Company should not have claimed benefit of section 10AA, 32AD, additional depreciation, 33AB, 33ABA, 35AD, 35(1)(ii)/(ii a)/(iii), 35(2AA), 35(2AB), 35CCC, 35CCD & any deduction in respect of income under chapter VI A (i.e. 80IA/ IB etc.) other than provisions of section 80JJAA(Deduction for additional employee cost incurred during the year).
  2. Company cannot setoff any loss carried forward from any earlier Assessment year if such loss is attributed to any deduction referred above. Such loss shall be deemed to have been already given full effect to and no further deduction such loss shall be allowed for any subsequent year.
  3. Option has to be exercise upto due date of return filing of the relevant previous year. Once the option has been exercised for any previous year then it cannot be subsequently withdrawn for the same or any other previous year

 

Section 115BAB: Tax on income of certain new domestic manufacturing companies (added by the Taxation Laws Ordinance 2019 w.e.f. AY 2020-21)

As per section 115BAB tax at the rate of 15% is charged on Certain new domestic manufacturing company subject to the other provisions of chapter XII other than section 115BA & section 115BAA. The effective rate of tax for this section shall be 17.16% (15+10%+4%) inclusive of surcharge and health and education cess. Companies which opt for section 115BAB shall not be required to pay Minimum alternate tax. If company follows section 115BAB then applicable surcharge rate shall be 10% irrespective of total income.

In order to pay tax at the rate of 15% the following conditions must be satisfied:

  1. The company has been set up and registered on or after 1st October 2019, and has commenced manufacturing on or before 31st March 2023
  2. It should not be formed by splitting up, or the reconstruction, of a business already in existence
  3. The plant and machinery purchased must be new except:
    1. 20% of the total plant and machinery can be 2nd hand
    2. Imported plant and machinery shall be treated as new only for this section
  4. Company must not use any building previously used as a hotel or a convention center.
  5. The company is not engaged in any business other than the business of manufacture or production of any article or thing and research in relation to or distribution of such article or thing manufactured or produced by it.
  6. Company should not have claimed benefit of section 10AA, 32AD, additional depreciation, 33AB, 33ABA, 35AD, 35(1)(ii)/(ii a)/(iii), 35(2AA), 35(2AB), 35CCC, 35CCD & any deduction in respect of income under chapter VI A (i.e. 80IA/ IB etc.) other than provisions of section 80JJAA (Deduction for additional employee cost incurred during the year).
  7. Company cannot setoff any loss carried forward from any earlier Assessment year if such loss is attributed to any deduction referred above. Such loss shall be deemed to have been already given full effect to and no further deduction such loss shall be allowed for any subsequent year.

Where it appears to the assessing officer that owing to the close connection between the company and any other person or for any other reason, the course of business between them is so arranged that the business transacted between them produces to the company more than the ordinary profits which might be expected to rise then Assessing officer shall compute the income of company. If transactions is more than 20 crore then it will be covered in specified domestic transaction and transfer pricing shall apply.

E. Tax rate applicable for Trust:

As per income tax act the following is the rate of tax applicable for Trust:

Normal income of trust is taxable at slab rates as below:

Taxable IncomeTax Rate

Up to Rs. 2,50,000 Nil

Rs. 2,50,000 to Rs 5,00,000 5%

Rs. 5,00,000 to Rs. 10,00,000 20%

Above Rs. 10,00,000 30%

Taxation of anonymous donation:

Where the trust is deriving its income through anonymous donations then such anonymous donation shall be taxed at the rate of 30% in excess of higher of the following:

5% of total donation Or Rs. 1,00, 000 Whichever is higher

a)  Surcharge:

i)  The amount of income-tax shall be increased by a surcharge at the rate of 10% of such tax, where total income exceeds fifty lakh rupees but does not exceed one crore rupees. However, the surcharge shall be subject to marginal relief (where income exceeds fifty lakh rupees, the total amount payable as income-tax and surcharge shall not exceed total amount payable as income-tax on total income of fifty lakh rupees by more than the amount of income that exceeds fifty lakh rupees).

ii)  The amount of income-tax shall be increased by a surcharge at the rate of 15% of such tax, where total income exceeds one crore rupees. However, the surcharge shall be subject to marginal relief (where income exceeds one crore rupees, the total amount payable as income-tax and surcharge shall not exceed total amount payable as income-tax on total income of one crore rupees by more than the amount of income that exceeds one crore rupees).

iii) The amount of income-tax shall be increased by a surcharge at the rate of 25% of such tax, where total income exceeds two crore rupees but not more than five crore rupees. However, the surcharge shall be subject to marginal relief.

iv) The amount of income-tax shall be increased by a surcharge at the rate of 37% of such tax, where total income exceeds five crore rupees. However, the surcharge shall be subject to marginal relief.

b)  Health and Education Cess: The amount of income-tax and the applicable surcharge shall be further increased by health and education cess calculated at the rate of 4 % of such income-tax and surcharge.

F. Tax rates applicable for Hindu Undivided Family (HUF)

Income of HUF is taxable at slab rates as below:

Taxable IncomeTax Rate

Up to Rs. 2,50,000 Nil

Rs. 2,50,000 to Rs 5,00,000 5%

Rs. 5,00,000 to Rs. 10,00,000 20%

Above Rs. 10,00,000 30%

a)  Surcharge:

i)  The amount of income-tax shall be increased by a surcharge at the rate of 10% of such tax, where total income exceeds fifty lakh rupees but does not exceed one crore rupees. However, the surcharge shall be subject to marginal relief (where income exceeds fifty lakh rupees, the total amount payable as income-tax and surcharge shall not exceed total amount payable as income-tax on total income of fifty lakh rupees by more than the amount of income that exceeds fifty lakh rupees).

ii)  The amount of income-tax shall be increased by a surcharge at the rate of 15% of such tax, where total income exceeds one crore rupees. However, the surcharge shall be subject to marginal relief (where income exceeds one crore rupees, the total amount payable as income-tax and surcharge shall not exceed total amount payable as income-tax on total income of one crore rupees by more than the amount of income that exceeds one crore rupees).

iii) The amount of income-tax shall be increased by a surcharge at the rate of 25% of such tax, where total income exceeds two crore rupees but not more than five crore rupees. However, the surcharge shall be subject to marginal relief.

iv) The amount of income-tax shall be increased by a surcharge at the rate of 37% of such tax, where total income exceeds five crore rupees. However, the surcharge shall be subject to marginal relief.

b)  Health and Education Cess: The amount of income-tax and the applicable surcharge shall be further increased by health and education cess calculated at the rate of 4 % of such income-tax and surcharge.

G. Tax rates applicable for Artificial Jurisdictional Person:

Income of Artificial Jurisdictional Person is taxable at slab rates as below:

Taxable IncomeTax Rate

Up to Rs. 2,50,000 Nil

Rs. 2,50,000 to Rs 5,00,000 5%

Rs. 5,00,000 to Rs. 10,00,000 20%

Above Rs. 10,00,000 30%

a)  Surcharge:

i)  The amount of income-tax shall be increased by a surcharge at the rate of 10% of such tax, where total income exceeds fifty lakh rupees but does not exceed one crore rupees. However, the surcharge shall be subject to marginal relief (where income exceeds fifty lakh rupees, the total amount payable as income-tax and surcharge shall not exceed total amount payable as income-tax on total income of fifty lakh rupees by more than the amount of income that exceeds fifty lakh rupees).

ii)  The amount of income-tax shall be increased by a surcharge at the rate of 15% of such tax, where total income exceeds one crore rupees. However, the surcharge shall be subject to marginal relief (where income exceeds one crore rupees, the total amount payable as income-tax and surcharge shall not exceed total amount payable as income-tax on total income of one crore rupees by more than the amount of income that exceeds one crore rupees).

iii) The amount of income-tax shall be increased by a surcharge at the rate of 25% of such tax, where total income exceeds two crore rupees but not more than five crore rupees. However, the surcharge shall be subject to marginal relief.

iv) The amount of income-tax shall be increased by a surcharge at the rate of 37% of such tax, where total income exceeds five crore rupees. However, the surcharge shall be subject to marginal relief.

b)  Health and Education Cess: The amount of income-tax and the applicable surcharge shall be further increased by health and education cess calculated at the rate of 4 % of such income-tax and surcharge.

HTax rates applicable for Co-operative Society

Following are the tax rates applicable for Cooperative society:

Taxable incomeTax Rate

Up to Rs. 10,000 10%

Rs. 10,000 to Rs. 20,000 20%

Above Rs. 20,000 30%

Add:

a) Surcharge: The amount of income-tax shall be increased by a surcharge at the rate of 12% of such tax, where total income exceeds one crore rupees. However, the surcharge shall be subject to marginal relief (where income exceeds one crore rupees, the total amount payable as income-tax and surcharge shall not exceed total amount payable as income-tax on total income of one crore rupees by more than the amount of income that exceeds one crore rupees).

b) Health and Education Cess: The amount of income-tax and the applicable surcharge, shall be further increased by health and education cess calculated at the rate of 4% of such income-tax and surcharge.

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