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DIRECT TAX
INCOME TAX RATES
No changes proposed in the slabs of personal tax rate. Accordingly, the rate of tax as applicable for AY 2021-22 is as under:
| Income (INR) | Existing and Proposed Rates (%) | ||
| Individuals (Age < 60 years) and HUF, BOI, AOP | Individual senior citizens (Age > 60 years < 80 years) | Individual super senior citizens (Age > 80 years) | |
| – 2,50000 | NIL | NIL | NIL |
| 250,001 – 300,000 | 5 | NIL | NIL |
| 300,001 – 500,000 | 5 | 5 | NIL |
| 500,001 – 1,000,000 | 20 | 20 | 20 |
| 1,000,001 and above | 30 | 30 | 30 |
An alternative conditional personal income-tax regime has been proposed. This would be available as an option to the above existing tax regime. The rate of tax applicable under the proposed regime are as under:
| Income (INR) | Proposed Rates (%) |
| Individuals and HUF | |
| 0 - 250,000 | NIL |
| 250,001 - 500,000 | 5 |
| 500,001 - 750,000 | 10 |
| 750,001 - 1,000,000 | 15 |
| 1,000,001 - 1,250,000 | 20 |
| 1,250,001 – 1,500,000 | 25 |
| 1,500,001 and above | 30 |
Rebate, Surcharge & Cess
| Sr. No. | Particulars | Existing & Proposed |
| 1 | Rebate |
|
| 2 | Surcharge (for income other than Capital Gains) |
|
| 3 | Surcharge (for Capital Gains – i.e. Section 111A & 112A of the IT Act) |
|
| 4 | Cess - Health and Education cess |
|
| 5 | AMT (including surcharge and cess) |
|
Below is a comparative analysis of these alternative regimes:
| Particulars | Existing | Proposed | Existing | Proposed |
| Total Income > INR 1 million | Total Income > INR 1 million | Total Income > INR 1.5 million | Total Income > INR 1.5 million | |
| Total Income (assumed) | 1,000,000 | 1,000,000 | 2,500,000 | 2,500,000 |
| Deduction under Section 80C | (1,50,000) | - | (1,50,000) | - |
| Net total Income | 8,50,000 | 1,000,000 | 23,50,000 | 2,500,000 |
| Total Tax payable (as per slab rates) |
82,500 | 75,000 | 5,17,500 | 4,87,500 |
| Add: Health & Education Cess (@4%) | 3,300 | 3,000 | 20,700 | 19,500 |
| Total tax payable | 85,800 | 78,000 | 5,38,200 | 5,07,000 |
| Effective tax rate (i.e. total tax payable/ total income) | 8.58% | 7.80% | 21.53% | 20.28% |
For Companies, Firms, LLP
| Sr. No. | Description | Existing rates
(%) (Including surcharge & Cess) |
Proposed rates
(%) (Including surcharge & Cess) |
||||
| (A) | Domestic Companies | Net income ≤ INR 1 crore | Net Income > INR 1 crore, but ≤ INR 10 crore | Net income > INR 10 crore | Net income ≤ INR 1 crore | Net Income > INR 1 crore, but ≤ INR 10 crore | Net income > INR 10 crore |
| 1 | Turnover or gross receipts in previous year 2017-18 ≤ INR 400 crore (base rate – 30%) | 26.00 | 27.82 | 29.12 | 26.00 | 27.82 | 29.12 |
| 2 | Covered under Section 115BA (base rate – 25%) | 26.00 | 27.82 | 29.12 | 26.00 | 27.82 | 29.12 |
| 3 | Covered under Section 115BAA (base rate – 22%) | 25.17 | 25.17 | ||||
| 4 | Covered under Section 115BAB (base rate – 15%) | 17.16 | 17.16 | ||||
| 5 | Any other Company having turnover or gross receipts in previous year 2017-18 > INR 400 crore | 31.20 | 33.38 | 34.94 | 31.20 | 33.38 | 34.94 |
| 6 | MAT under Section 115JB for companies other than that covered under Section 115BAA and 115BAB (Rate to be applied on book profits – base rate 15%) |
15.60 | 16.69 | 17.47 | 15.60 | 16.69 | 17.47 |
| 7 | BBT under Section 115QA (base rate -20%) |
23.30 | 23.30 | ||||
| 8 | DDT under Section 115-O (without grossing up; base rate – 15%) |
17.47 | Nil | ||||
| (B) | Foreign Companies | Net income ≤ INR 1 crore | Net Income > INR 1 crore, but ≤ INR 10 crore | Net income > INR 10 crore | Net income ≤ INR 1 crore | Net Income > INR 1 crore, but ≤ INR 10 crore | Net income > INR 10 crore |
| 1 | Regular tax (base rate – 40%) | 41.60 | 42.43 | 43.68 | 41.60 | 42.43 | 43.68 |
| (C) | Firms and LLP | Net income ≤ INR 1 crore | Net income > INR 1 crore | Net income ≤ INR 1 crore | Net income > INR 1 crore | ||
| 1 | Regular tax (base rate – 30%) | 31.2 | 34.94 | 31.2 | 34.94 | ||
| Adjusted total income ≤ INR 1 crore | Adjusted total income > INR 1 crore | Adjusted total income ≤ INR 1 crore | Adjusted total income > INR 1 crore | ||||
| 2 | AMT (base rate – 18.5%) | 19.24 | 21.55 | 19.24 | 21.55 | ||
Surcharge and Cess
| Particulars | Existing & Proposed |
| Other domestic companies |
|
| For Domestic companies covered under Section 115BAA and Section 115BAB of the IT Act |
|
| For Foreign companies |
|
| For Firms and LLP |
|
| Cess - Health and Education cess |
|
Download: Union Budget 2020 – Direct Tax – An Analysis
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
