Budget 2020: Sitharaman announces new income tax rates

Finance Minister Nirmala Sitharaman has announced "a new and simplified personal tax regime' with revised income tax slabs and tax rates. Those earning Rs 5-7.5 lakh will now pay just 10 per cent, while those earning up to Rs 5 lakh in a year will pay no tax.

Budget 2020: Sitharaman announces new income tax rates


A. Incentives to Individual and HUF

(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:

Total Income (Rs)
Rate
Upto 2,50,000
Nil
From 2,50,001 to 5,00,000
5 per cent.
From 5,00,001 to 7,50,000
10 per cent.
From 7,50,001 to 10,00,000
15 per cent.
From 10,00,001 to 12,50,000
20 per cent.
From 12,50,001 to 15,00,000
25 per cent.
Above 15,00,000
30 per cent.


(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,—

  • 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;
In simple words,Individuals and HUFs cannot avail any deductions or exemptions.Only deductions u/s 80CCD(2) and 80JJAA(2) are available under this option.If you want standard deductions,then you can avail old option(i.e. old slab rates).

  • without set off of any loss,- 

1.carried forward or depreciation from any earlier assessment year, if such loss or depreciation is attributable to any of the deductions mentioned above; or
2.under the head house property with any other head of income;

  • by claiming the depreciation, if any, under section 32, except clause (iia) of sub-section (1) thereof, determined in that section.
  • without any exemption or deduction for allowances or perquisite, by whatever name called, provided under any other law.
(v) the loss and depreciation mentioned 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, 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,-
  • 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 
  • 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;
In short,once you have exercised this option,you have to opt it for subsequent years also.To opt this option,Return of Income has to be filed on or before the due date. 
(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 fulfilment 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.

If any individual or HUF is having Income from Business,then he cannot avail this option.If Individuals or HUFs who opted for this option started earning income from business,then he has to withdraw this option.

The condition listed at (iv)th Point (Bullet no.1) above, means that the individual or HUF opting for taxation under the newly inserted section 115BAC of 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.

     It is further proposed to amend section 115JC of the Act so as to provide that the provisions relating to AMT shall 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.  

        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:
  • Transport Allowance granted to a divyang employee to meet expenditure for the purpose of commuting between 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.

COMMENTS

BLOGGER: 1
  1. This comment has been removed by a blog administrator.

    ReplyDelete
Don't post any spam link here.

Name

Announcements,7,budget,22,ca,18,CAstudents,24,Chartered Accountant,13,conversion,1,Deductions,7,diploma,1,employmentbridge,1,expectations,2,Final,20,finance,3,gst,4,icai,12,icaiexam,5,incometax,8,individual,5,international taxation,4,ipcc,2,management,1,members,3,Notifications,1,registration,1,results,3,sections,1,Tax,8,Tax Laws,4,taxpayers,12,womenempowerment,1,
ltr
item
TaxKida: Budget 2020: Sitharaman announces new income tax rates
Budget 2020: Sitharaman announces new income tax rates
Finance Minister Nirmala Sitharaman has announced "a new and simplified personal tax regime' with revised income tax slabs and tax rates. Those earning Rs 5-7.5 lakh will now pay just 10 per cent, while those earning up to Rs 5 lakh in a year will pay no tax.
https://1.bp.blogspot.com/-cnH_FczjjkQ/XjvjOc_B92I/AAAAAAAAAwA/uaq1Wa9XwVk28a2H9Hr4AWH-tN1-CqaowCEwYBhgL/s640/BUDGET%2B2020.webp
https://1.bp.blogspot.com/-cnH_FczjjkQ/XjvjOc_B92I/AAAAAAAAAwA/uaq1Wa9XwVk28a2H9Hr4AWH-tN1-CqaowCEwYBhgL/s72-c/BUDGET%2B2020.webp
TaxKida
https://www.taxkida.live/2020/02/budget-2020-effects-on-taxes.html
https://www.taxkida.live/
https://www.taxkida.live/
https://www.taxkida.live/2020/02/budget-2020-effects-on-taxes.html
true
2940403265630534384
UTF-8
Loaded All Posts Not found any posts VIEW ALL Readmore Reply Cancel reply Delete By Home PAGES POSTS View All RECOMMENDED FOR YOU LABEL ARCHIVE SEARCH ALL POSTS Not found any post match with your request Back Home Sunday Monday Tuesday Wednesday Thursday Friday Saturday Sun Mon Tue Wed Thu Fri Sat January February March April May June July August September October November December Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec just now 1 minute ago $$1$$ minutes ago 1 hour ago $$1$$ hours ago Yesterday $$1$$ days ago $$1$$ weeks ago more than 5 weeks ago Followers Follow THIS PREMIUM CONTENT IS LOCKED STEP 1: Share to a social network STEP 2: Click the link on your social network Copy All Code Select All Code All codes were copied to your clipboard Can not copy the codes / texts, please press [CTRL]+[C] (or CMD+C with Mac) to copy