Budget 2020 introduced new tax rates option. On satisfaction of certain conditions, an individual or HUF shall, from assessment year 2021-22 onward, have the option to pay tax in respect of the total income at following rates.
Total Income Rate
Upto Rs. 2,50,000 NIL
From 2,50,000 to 5,00,000 5%
From 5,00,001 to 7,50,000 10 %
From 7,50,001 to 10,00,000 15 %
From 10,00,001 to 12,50,000 20 %
From 12,50,001 to 15,00,000 25 %
Above 15,00,000 30 %
- The option shall be exercised for every previous year where the individual or the HUF has no business income, and in other cases the option once exercised for a previous year shall be valid for that previous year and all subsequent years
- The option shall become invalid for a previous year or previous year, as the case may be, if the individual or HUF fails to satisfy the conditions and other provisions of the Act shall apply;
- the condition for concessional rate shall be that the total income of the individual or HUF is computed –
(a) without any below exemptions or deductions :
- House Rent allowance u/s 10(13A)
- Leave Travel Allowance u/s 10(5)
- Some of the allowances u/s 10(14)
- Allowances to MPs/MLAs u/s 10(17)
- Allowance for income of minor u/s 10(32)
- Exemption for SEZ unit u/s 10AA
- Standard deduction, deduction for entertainment allowance and employment/professional tax u/s 16
- Interest u/s 24 in respect of self-occupied property or vacant property u/s 23(2). Loss under the head income from house property for rented house shall not be allowed to be set off under any other and would be allowed to be carried forward as per the extant law.
- Additional depreciation u/s 31(1)(iia)
- Deductions u/s 32AD, 33AB, 33ABA
- Various deductions for donation for or expenditure on scientific research contained in sub-clause (ii)/(iia)/(iii) of sub-section 1 or (2AA) of section 35
- Deduction u/s 35AD or section 35CCC
- Deduction from family pension u/s 57
- Any deduction under chapter VIA (like section 80C, 80CCC, 80CCD,80D,80DD,80DDB, 80E, 80EE, 80EEA, 80EEB, 80G, 80GG, 80GGA, 80GGC,80IA, 80I-IAB, 80-IAC,80-IB, 80-IBA etc.). However deduction u/s 80CCD(2) and u/s 80JJA can be claimed.
(b) without set off of any loss-
(i) carry forward or depreciation from any earlier assessment year, if such loss or depreciation is attributable to any of the deductions referred to in (a) above; or
(ii) under the head house property with any other head of income;
(c) by claiming the depreciation, if any, u/s 32 except clause (iia) of sub-section (1) thereof, determined in such manner as may be prescribed; and
(d) without any exemption or deduction of allowances or perquisites
- The option can be withdrawn only once where it was exercised by the individual or HUF having business income for a previous year other than the year in which it was exercised and thereafter except where such individual or HUF ceases to have business income can change the option every year.
Following allowances u/s 10(14) are allowed under new tax rate regime
- Transport allowance granted to divyang employee to meet expenditure for the purpose of commuting between the place of residence and place of duty.
- Conveyance allowance granted to meet the expenditure on conveyance in performance of duties of an office.
- Any allowance granted to meet the cost of travel on tour or on transfer.
- Daily allowance to meet the ordinary daily charges incurred by an employee on account of absence from his normal place of duty.
Also Read: E-Commerce operator and Tax implications
Also Read: Income Tax on F&O and Intraday Trading
Also Read: Tax on NRI for sale of Immovable Property in India
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