Incentives to Individual and HUF.In line with options provided to domestic companies under the TLAA and proposed to be provided to resident co-operative societies under this Bill, it is also proposed to provide similar option to individual and HUF by insertion of section 115BAC in the Act, which provides the following:-
(i) On satisfaction of certain conditions, an individual or HUF shall, from assessment year 2021-22 onwards, have the option to pay tax in respect of the total income at following rates:
NEW TAX SLAB ( NEW TAX REGIME) W.E.F. 01/04/2020
Total Income (Rs) Rate
Up to 2,50,000 Nil
From 2,50,001 to 5,00,000 5per cent.
From 5,00,001 to 7,50,000 10per cent.
From 7,50,001 to 10,00,000 15per cent
From 10,00,001 to 12,50,000 20per cent.
From 12,50,001 to 15,00,000 25per cent.
Above 15,00,000 30per cent.
OLD TAX SLAB ( OLD TAX REGIME W.E.F. 01/04/2019)
Income Tax rates for individuals below 60 years of age for FY 2019-20:
Taxable income | Tax Rates in India for individuals below 60 years |
INR 0 to INR 2,50,000 | Nil |
INR 2,50,000 to INR 5,00,000 | 5% |
INR 5,00,000 to INR 10,00,000 | ₹12,500 + 20% of total income exceeding ₹5,00,000 |
Above INR 10,00,000 | ₹1,12,500 + 30% of total income exceeding ₹10,00,000 |
Income tax slabs for senior Citizens for FY 2019-20
Taxable income | Tax Rates in India for Senior Citizen (Aged 60 but less than 80) |
INR 0 to INR 3,00,000 | Nil |
INR 3,00,000 to INR 5,00,000 | 5% |
INR 5,00,000 to INR 10,00,000 | ₹10,000 + 20% of total income exceeding ₹5,00,000 |
Above INR 10,00,000 | ₹1,10,000 + 30% of total income exceeding ₹10,00,000 |
Income Tax Slabs for Super Senior Citizens for FY 2019-20
Taxable income | Tax Rates in India for Super Senior Citizens (Aged 80 years and above) |
INR 0 to INR 5,00,000 | Nil |
INR 5,00,000 to INR 10,00,000 | 20% |
Above INR 10,00,000 | ₹1,00,000 + 30% of total income exceeding ₹10,00,000 |
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(ii)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.
(iii)The option shall become invalid for a previous year or previous years, as the case may be, if the Individual or HUF fails to satisfy the conditions and other provisions of the Act shall apply;
(iv)the condition for concessional rate shall be that the total income of the individual or HUF is computed,—
(a) Without any exemption or deduction under the provisions of clause (5) or clause (13A) or prescribed under clause (14) (other than those as may be prescribed for this purpose) or clause (17) or clause (32) of section 10 or section 10AA or section 16 or clause
(b) Of section 24 [in respect of property referred to in sub-section (2) of section 23] or clause (iia) of sub-section
(1) of section 32 or section 32AD or section 33AB or section 33ABA or sub-clause
(ii) Or sub-clause (iia) or sub-clause (iii) of sub-section (1) or sub-section (2AA) of section 35 or section 35AD or section 35CCC or clause (iia) of section 57 or under any provisions of Chapter VI-A other than the provisions of sub-section
(2) Of section 80CCD or section 80JJAA;(b)without set off of any loss,-
(i) carried 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, under section 32, except clause (iia) of sub-section (1) thereof, determined in such manner as may be prescribed; and(d)without any exemption or deduction for allowances or perquisite, by whatever name called, provided under any other law for the time being in force.(v)theloss and depreciation referred to in (ii)(b) above shall be deemed to have been given full effect to and no further deduction for such loss or depreciation shall be allowed for any subsequent year so however, that where there is a depreciation allowance in respect of a block of asset which has not been given full effect to prior to the assessment year beginning on 1st April, 2021.
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Corresponding adjustment shall be made to the written down value of such block of assets as on 1st April, 2020 in the prescribed manner, if the option is exercised for a previous year relevant to the assessment year beginning on 1st April, 2021;
(vi)the concessional rate shall not apply unless option is exercised by the individual or HUF in the form and manner as may be prescribed,-
A) where such individual or HUF has no business income, along with the return of income to be furnished under sub-section (1) of section 139 of the Act;
and 8b.in any other case, on or before the due date specified under sub-section (1) of section 139 of the Act for furnishing the return of income for any previous year relevant to the assessment year commencing on or after 1st April, 2021 and such option once exercised shall apply to subsequent assessment years;
(vii) If the individual or HUF has a Unit in the International Financial Services Centre [clause (zc) of section 2 of the Special Economic Zones Act, 2005], as referred to in sub-section (1A) of section 80LA, the deduction under section 80LA shall be available to such Unit subject to fulfillment of the conditions contained in that section; and(viii)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, the individual or HUF shall never be eligible to exercise option under this section, except where such individual or HUF ceases to have any business income in which case, option under Para (vi)(a) above shall be available.
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It is further proposed to amend section 115JC of the Act so as to provide that the provisions relating to AMTshall not apply to such individual or HUF having business income.It is also proposed to amend section 115JD of the Act so as to provide that the provisions relating to carry forward and set off of AMT credit, if any, shall not apply to such individual or HUF having business income.The condition listed at (iva) above, means that the individual or HUF opting for taxation under the newly inserted section 115BACof the Act shall not be entitled to the following exemptions/deductions:
(i)Leave travel concession as contained in clause (5) of section 10;
(ii)House rent allowance as contained in clause (13A) of section 10;
(iii)Some of the allowance as contained in clause (14) of section 10;
(iv)Allowances to MPs/MLAs as contained in clause (17) of section 10;
(v)Allowance for income of minor as contained in clause (32) of section 10;
(vi) Exemption for SEZ unit contained in section 10AA;
(vii) Standard deduction, deduction for entertainment allowance and employment/professional tax as contained in section 16;
(viii)Interest under section 24 in respect of self-occupied or vacant property referred to in sub-section (2) of section 23. (Loss under the head income from house property for rented house shall not be allowed to be set off under any other head and would be allowed to be carried forward as per extant law);
(ix)Additional deprecation under clause (iia) of sub-section (1) of section 32;(x)Deductions under section 32AD, 33AB, 33ABA;
(xi)Various deduction for donation for or expenditure on scientific research contained in sub-clause (ii) or sub-clause (iia) or sub-clause (iii) of sub-section (1) or sub-section (2AA) of section 35;
(xii)Deduction under section 35AD or section 35CCC;
(xiii)Deduction from family pension under clause (iia) of section 57;(xiv)
Any deduction under chapter VIA (like section 80C, 80CCC, 80CCD, 80D, 80DD,80DDB, 80E, 80EE, 80EEA, 80EEB, 80G, 80GG, 80GGA, 80GGC, 80IA, 80-IAB, 80-IAC, 80-IB, 80-IBA, etc).
However, deduction under sub-section (2) of section 80CCD (employer contribution on account of employee in notified pension scheme) and section 80JJAA (for new employment) can be claimed.
As many allowances have been provided through notification of rules, it is proposed to carry out amendment of the Income-tax Rules, 1962 (the Rules) subsequently, so as to allow only following allowances notified under section 10(14) of the Act to the Individual or HUF exercising option under the proposed section:(a)Transport Allowance granted to a divvyang employee to meet expenditure for the purpose of commuting between place of residence and place of duty
(b)Conveyance Allowance granted to meet the expenditure on conveyance in performance of duties of an office;
(c)Any Allowance granted to meet the cost of travel on tour or on transfer;
(d)Daily Allowance to meet the ordinary daily charges incurred by an employee on account of absence from his normal place of duty.It is also proposed to amend rule 3 of the Rules subsequently, so as to remove exemption in respect of free food and beverage through vouchers provided to the employee, being the person exercising option under the proposed section, by the employer.
9This amendment will take effect from 1st April, 2021 and will, accordingly, apply in relation to the assessment year 2021-22 and subsequent assessment
years.[Clauses53, 57 & 58]C.
Modification of concessional tax schemes for domestic companies under section 115BAA and 115BABTLAA inserted section 115BAA and section 115BAB in the Act to provide domestic companies an option to be taxed at concessional tax rates provided they do not avail specified deductions and incentives.
Some of the deductions prohibited are deductions under any provisions of Chapter VI-A under the heading “C. Deduction in respect of certain incomes” other than the provisions of section 80JJAA. It is now proposed to amend the provisions of section 115BAA and section 115BAB to not allow deduction under any provisions of Chapter VI-A other than section 80JJAAor section 80M, in case of domestic companies opting for taxation under these sections.These amendments will take effect from 1st April, 2020 and will, accordingly, apply in relation to the assessment year 2020-21 and subsequent assessment years.[Clauses 51 & 52]D.
Withdrawal of exemption on certain perquisites or allowances provided to Union Pubic Services Commission (UPSC) Chairman and members and Chief Election Commissioner and Election Commissioners Section 10 of the Act provides for exemption in respect of certain incomes and activities under specific circumstances. Clause (45) thereof, inserted by the Finance Act, 2011,
Provides that any allowance or perquisite as may be notified by the Central Government, paid to the serving/ retired Chairman or Members of UPSC shall not be included in computing their total income and hence shall be exempt from income-tax. Further, vide Notification No. 49/2011 dated 6th September, 2011 bearing SO 2045(E), it was notified that in the case of serving Chairman and members of UPSC the following allowances and perquisites shall be exempt from income-tax for the purposes of clause (45) of section 10 of the Act, with effect from 1st April, 2008
:
(i)the value of rent-free official residence;
(ii)the value of conveyance facilities including transport allowance;
(iii)the sumptuary allowance;
(iv)the value of leave travel concession provided toa serving Chairman or member ofthe UPSC and members of his family.
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