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1. In case of an Individual (resident or non-resident) or HUF or Association of Person or Body of Individual or any other artificial juridical person
Add:
a. Surcharge : Surcharge is levied on the amount of income-tax at following rates if total income of an assessee exceeds specified limits:-
Note:
(1) The enhanced surcharge of 25% & 37%, as the case may be, is not levied, on dividend income or income chargeable to tax under sections 111A, 112, 112A and 115AD(1)(b). Hence, the maximum rate of surcharge on tax payable on such incomes shall be 15%.
(2) The surcharge rate for AOP with all members as a company, shall be capped at 15%.
(3) The surcharge rate is nil if the total income of a ‘specified fund’ as referred to in section 10(4D) includes any income in respect of securities as given under section 115AD(1)(a) (For Assessment Year 2024-25).
Marginal relief is available from surcharge in following manner-
i. in case where net income exceeds Rs. 50 lakh but doesn`t exceed Rs. 1 Crore, the amount payable as income tax and surcharge shall not exceed the total amount payable as income tax on total income of Rs 50 Lakh by more than the amount of income that exceeds Rs 50 Lakhs.
ii. in case where net income exceeds Rs. 1 crore but doesn`t exceed Rs. 2 crore, marginal relief shall be available from surcharge in such a manner that the amount payable as income tax and surcharge shall not exceed the total amount payable as income-tax on total income of Rs. 1 crore by more than the amount of income that exceeds Rs. 1 crore.
iii. in case where net income exceeds Rs. 2 crores but doesn`t exceed Rs. 5 crores, marginal relief shall be available from surcharge in such a manner that the amount payable as income tax and surcharge shall not exceed the total amount payable as income-tax on total income of Rs. 2 crores by more than the amount of income that exceeds Rs. 2 crores.
iv. in case where net income exceeds Rs. 5 crores, marginal relief shall be available from surcharge in such a manner that the amount payable as income tax and surcharge shall not exceed the total amount payable as income-tax on total income of Rs. 5 crores by more than the amount of income that exceeds Rs. 5 crores.
b. Health and Education Cess : Health and Education Cess is levied at the rate of 4% on the amount of income-tax plus surcharge.
Notes:
(1) The Health and Education Cess is nil if the total income of a `specified fund` as referred to section 10(4D) includes any income in respect of securities as given under section 115AD(1)(a) (For Assessment Year 2024-25).
(2) A resident individual (whose net income does not exceed Rs. 5,00,000) can avail rebate under section 87A. It is deductible from income-tax before calculating education cess. The amount of rebate is 100 per cent of income-tax or Rs. 12,500, whichever is less.
(3) If the total income of resident individual, who is opting for the new tax scheme under section 115BAC(1A), is up to Rs. 7,00,000, a higher rebate of Rs. 25,000 is allowed under section 87A.Such higher rebate is also subject to marginal relief (For Assessment Year 2024-25).
Alternate Minimum Tax (AMT)
An individual is liable to pay Alternate Minimum Tax where tax payable by him, on his total income computed as per normal provisions of the Act, is less than 18.5% of `adjusted total income`. In such a case the `adjusted total income` is taken as income of such individual and he shall be liable to pay tax at the rate of 18.5% of such `adjusted total income`.
However, AMT is levied at the rate of 9% (plus surcharge and cess as applicable) in case of an assessee other than a company, being a unit of an International Financial Services Centre and deriving its income solely in convertible foreign exchange.
1.1. Special tax Rate for Individual and HUFs
New tax regime (also known as alternative tax regime) is optional for the Assessment Year 2023-24. An individual or HUF has to exercise the option under Section 115BAC(5) to avail its benefit.
However, for the Assessment Year 2024-25, the new tax regime is the default tax regime for the Individual or HUF. Further, the benefit of new tax regime has also extended to Association of Persons (AOP)/Body of Individuals (BOI) and Artificial Juridical Person (AJP) w.e.f. Assessment Year 2024-25. If one to opt-out from default new tax regime, he has to exercise the option under Section 115BAC(6).
The tax rates under the new tax regime are as under:
(a) For Assessment Year 2023-24:
(b) For Assessment Year 2024-25:
Note: The enhanced surcharge of 25% or 37% is not levied, on income by way of dividend or from income chargeable to tax under sections 111A, 112, 112A and 115AD(1)(b). Hence, the maximum rate of surcharge on tax payable on such incomes shall be 15%. Also, the surcharge rate for AOP with all members as a company, shall be capped at 15%.
However, enhanced surcharge rate of 37% is not applicable for assessees opting for tax regime under section 115BAC (from Assessment Year 2024-25).
Further, the surcharge rate is nil if the total income of a specified fund as referred to in section 10(4D) includes any income in respect of securities as given under section 115AD(1)(a) (For Assessment Year 2024-25).
However, marginal relief is available from surcharge in following manner-
iii. in case where net income exceeds Rs. 2 crores, marginal relief shall be available from surcharge in such a manner that the amount payable as income tax and surcharge shall not exceed the total amount payable as income-tax on total income of Rs. 2 crores by more than the amount of income that exceeds Rs. 2 crores.
b. Health and Education Cess : Health and Education Cess is levied at the rate of 4% on the amount of income-tax plus surcharge. However, The Health and Education Cess is nil if the total income of a `specified fund` as referred to section 10(4D) includes any income in respect of securities as given under section 115AD(1)(a) (For Assessment Year 2024-25).
(a) For Assessment Year 2023-24, a resident individual (whose net income does not exceed Rs. 5,00,000) can avail rebate under section 87A. It is deductible from income-tax before calculating education cess. The amount of rebate is 100 percent of income-tax or Rs.12,500, whichever is less.
(b) From Assessment Year 2024-25, a maximum rebate of Rs. 25,000 is allowed under section 87A, if the total income of a resident individual, who is opting for the new tax scheme under Section 115BAC(1A), is up to Rs. 7,00,000.
(c) Further, if the total income of the resident individual opting section 115BAC(1A) exceeds Rs. 7,00,000 and the tax payable on such income exceeds the difference between the total income and Rs. 7,00,000, he can claim a rebate with marginal relief to the extent of the difference between the tax payable on such total income and the amount of income by which it exceeds Rs. 7,00,000
(d) If an assessee has opted for new tax regime, the provisions of AMT shall not be applicable.
2. Partnership Firm
For the Assessment Years 2023-24 & 2024-25, a partnership firm (including LLP) is taxable at 30%.
(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 four percent of such income-tax and surcharge
A partnership firm is liable to pay Alternative Minimum Tax where tax payable by it, on total income computed as per normal provisions of the Act, is less than 18.5% of `adjusted total income`. In such a case the `adjusted total income` is taken as the income of the firm and it shall be liable to pay tax at the rate of 18.5% of such `adjusted total income`.
3. Local Authority
For the Assessment Years 2023-24 & 2024-25, a local authority is taxable at 30%.
(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 four percent of such income-tax and surcharge.
A Local Authority is liable to pay Alternative Minimum Tax where tax payable by it, on total income computed as per normal provisions of the Act, is less than 18.5% of `adjusted total income`. In such a case the `adjusted total income` is taken as the income of the firm and it shall be liable to pay tax at the rate of 18.5% of such `adjusted total income`.
However, AMT is levied at the rate of 9% (plus surcharge and cess as applicable) in case of a company, being a unit of an International Financial Services Centre and deriving its income solely in convertible foreign exchange.
4. Domestic Company
Income-tax rates applicable in case of domestic companies for assessment years 2023-24 and 2024-25 are as follows:
(a) Surcharge : The amount of income-tax shall be increased by a surcharge at the rate of 7% of such tax, where total income exceeds one crore rupees but not exceeding ten crore rupees and at the rate of 12% of such tax, where total income exceeds ten crore rupees. The surcharge shall be subject to marginal relief, which shall be as under:
(i) Where income exceeds Rs. 1 crore but not exceeding Rs. 10 crore, the total amount payable as income-tax and surcharge shall not exceed total amount payable as income-tax on total income of Rs. 1 crore by more than the amount of income that exceeds Rs. 1 crore.
(ii) Where income exceeds Rs. 10 crore, the total amount payable as income-tax and surcharge shall not exceed total amount payable as income-tax on total income of Rs. 10 crore by more than the amount of income that exceeds Rs. 10 crore
Minimum Alternate Tax (MAT)
A domestic company is liable to pay Minimum Alternate Tax where tax payable by it, on total income computed as per normal provisions of the Act, is less than 15% of `book profit`. In such a case the `book profit` is taken as the income of the company and it shall be liable to pay tax at the rate of 15% of such `book profit`.
However, MAT is levied at the rate of 9% (plus surcharge and cess as applicable) in case of a company, being a unit of an International Financial Services Centre and deriving its income solely in convertible foreign exchange.
4.1. Special Tax rates applicable to a domestic company
The special Income-tax rates applicable in case of domestic companies are as follows:
Surcharge : The rate of surcharge in case of a company opting for taxability under Section 115BAA or Section 115BAB shall be flat 10% irrespective of amount of total income.
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 four percent of such income-tax and surcharge.
MAT : The domestic company who has opted for special taxation regime under Section 115BAA & 115BAB is exempted from provision of MAT. However, no exemption is available in case where section 115BA has been opted.
5. Foreign Company
Assessment Years 2023-24 and 2024-25
(a) Surcharge: The amount of income-tax shall be increased by a surcharge at the rate of 2% of such tax, where total income exceeds one crore rupees but not exceeding ten crore rupees and at the rate of 5% of such tax, where total income exceeds ten crore rupees. However, the surcharge shall be subject to marginal relief, which shall be as under:
(i) Where income exceeds one crore rupees but not exceeding ten 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.
(ii) Where income exceeds ten crore rupees, the total amount payable as income-tax and surcharge shall not exceed total amount payable as income-tax on total income of ten crore rupees by more than the amount of income that exceeds ten crore rupees.
A foreign company is liable to pay Minimum Alternate Tax where tax payable by it, on total income computed as per normal provisions of the Act, is less than 15% of `book profit`. In such a case the `book profit` is taken as the income of the company and it shall be liable to pay tax at the rate of 15% of such `book profit`.
However, the provisions of MAT do not apply in case of foreign companies if it does not have permanent establishment (PE) in India or opts for presumptive taxation scheme of Section 44B, Section 44BB, Section 44BBA or Section 44BBB.
6. Co-operative Society
(a) (a) Surcharge: The amount of income-tax shall be increased by a surcharge at the rate of 7% of such tax, where total income exceeds one crore rupees but not exceeding ten crore rupees and at the rate of 12% of such tax, where total income exceeds ten crore rupees. However, the surcharge shall be subject to marginal relief, which shall be as under:
(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 four percent of such income-tax and surcharge.
(a) A co-op. society is liable to pay Alternate Minimum Tax where tax payable by it, on total income computed as per normal provisions of the Act, is less than 15% of `adjusted total income`. In such a case the `adjusted total income` is taken as the income of co-op. society and it shall be liable to pay tax at the rate of 15% of such `adjusted total income`.
(b) If the assessee is a unit located in an International Financial Services Centre and derives its income solely in convertible foreign exchange, the rate of AMT will be 9%.
6.1. Alternative Tax regime for Co-operative societies
Income-tax Act allows a co-operative society to choose from the following alternative taxation regime subject to fulfilment of prescribed conditions:
Section 115BAE
• The co-operative society is set up and registered on or after 01-04-2023;
• It is engaged in manufacture or production of any article or thing;
• It commences manufacturing on or before 31-03-2024 ; and
• It does not claim specified exemption, incentive or deduction.
(a) Surcharge: The surcharge is levied at a rate of 10% on the amount of income-tax irrespective of the total income of such co-operative society.
(b) Health & 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.
(a) If a co-operative society has exercised the option of Section 115BAD or Section 115BAE, the provisions of AMT shall not be applicable. Further, the provisions regarding computation and carry forward of AMT credit shall also be not applicable.
[As amended by Finance Act, 2023]
1. For resident Senior Citizens. (Age above 60 Years)
2. For resident Super Senior Citizens. (Age above 80 Years)
3. Individuals, [other than those mentioned above, HUF, AOP/BOI (other than co-operative societies).
Note: Rebate u/s 87A, in which resident individuals are allowed rebate (if their taxable income does not exceed Rs. 5 lakh) equal to 100% of income tax or Rs. 12,500 whichever less.
Health and Education Cess: 4% on the amount of Tax plus surcharge
Health and Education Cess: 4% on the amount of Tax plus surcharge.
Companies
Surcharge : 12% of the Income Tax, where total taxable income is more than Rs. 1 crore.
Income tax : Flat rate of 22%
Surcharge : 10% of the Income Tax
Income tax : 30%.
Surcharge : 12% of the Income Tax, where total taxable income is more than Rs. 1 crore
The tax calculated on the basis of such rates will be subject to health and education cess of 4%.
Any individual opting to be taxed under the new tax regime from FY 2020-21 onwards will have to give up certain exemptions and deductions.
Here is the list of exemptions and deductions that a taxpayer will have to give up while choosing the new tax regime.
Leave Travel Allowance (LTA)
House Rent Allowance (HRA)
Conveyance
Daily expenses in the course of employment
Relocation allowance
Helper allowance
Children education allowance
Other special allowances [Section 10(14)]
Standard deduction
Professional tax
Interest on housing loan (Section 24)
Chapter VI-A deduction (80C,80D, 80E and so on) (Except Section 80CCD(2) and 80JJA)
Points to remember while opting for the new tax regime:
Option to be exercised on or before the due date of filing return of income for AY 2021-22
In case a taxpayer has a business income and exercised the option, he/she can withdraw from the option only once. A business taxpayer withdrawing from the optional tax regime has to follow the regular income tax slabs.
According to the current income tax laws in India, the income tax rate on resident individuals varies based on their age. There are different tax slabs applicable to the individuals for the financial year 2018-19 and 2019-20. For instance, a resident individual, aged below 60 years, with an income less than Rs 2.5 lacs is exempt from paying income tax.
No tax for individuals with income less than ? 2,50,000
0%-5% tax with income ? 2.5 lacs to 5 lacs for different age groups
20% tax with income ? 5 lacs to 10 lacs
30% tax with income above ? 10 lacs
A tax rebate under section 87A is allowed to individual taxpayers a maximum amount of:
– Rs 2,500 for total income up to Rs 3.5 lakh for FY 2018-19
– Rs 12,500 for total income up to Rs 5 lakh for FY 2019-20
Investments upto ? 1.5 lacs under Sec 80C can save ? 46,800 in taxes.
Note : An additional 4% Health & education cess will be applicable on the tax amount calculated as above.
Let’s understand the tax calculation for rebate with the help of an example:
Let’s understand the tax calculation for a rebate with the help of an example:
In addition cess and surcharge is levied as follows:
Cess: 4% of corporate tax
Surcharge applicable:
However, the rate of surcharge in case of a company opting for taxability under Section 115BAA or Section 115BAB shall be 10% irrespective of amount of total income.
Note: An additional 4% Health & education cess will be applicable on the tax amount calculated as above.
Surcharge applicable to the individuals covered in Part I, II and III:
In addition cess and surcharge is levied as follows: Cess: 4% of corporate tax
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