New Rates of Tax on Individual & HUF Under Section 115BAC - AY 2021-22 onwards - Income Tax - Ready Reckoner - Income Tax

Section 115BAC(1A) : B eing an individual or Hindu undivided family or association of persons (other than a co-operative society), or body of individuals, whether incorporated or not, or an artificial juridical person referred to in clause (31)(vii) of section 2 , other than a person who has exercised an option u/s 115BAC(6) [ As amended by Finance (No. 2) Act, 2024 ] Rate of Tax for the Assessment Year 2025-26 onwards TABLE Sl. No. Total income Rate of tax 1. Upto Rs. 3,00,000 Nil 2. From Rs. 3,00,001 to Rs. 7,00,000 5 per cent. 3. From Rs. 7,00,001 to Rs. 10,00,000 10 per cent. 4. From Rs. 10,00,001 to Rs. 12,00,000 15 per cent. 5. From Rs. 12,00,001 to Rs. 15,00,000 20 per cent. 6. Above Rs. 15,00,000 30 per cent. The conditions for the Assessment Year 2025-26 remains the same as for the AY 2024-25 as below. ================================ Rate of Tax for the Assessment Year 2024-25 onwards TABLE Sl. No. Total income Rate of tax (1) (2) (3) 1. Upto Rs. 3,00,000 Nil 2. From Rs. 3,00,001 to Rs. 6,00,000 5 per cent. 3. From Rs. 6,00,001 to Rs. 9,00,000 10 per cent. 4. From Rs. 9,00,001 to Rs. 12,00,000 15 per cent. 5. From Rs. 12,00,001 to Rs. 15,00,000 20 per cent. 6. Above Rs. 15,00,000 30 per cent.; Special Income under section 111A , 112 , 112A shall be taxable @ Special rates. Surcharge - the income-tax computed under section 115BAC(1A) shall be increased by a surcharge, 10% if total income exceeds ₹ 50 Lakhs but does not exceed ₹1 Crore. total income (including the income by way of dividend or income under the provisions of section 111A, section 112 and section 112A of the Income-tax Act) 15% if income exceeds ₹ 1 Crores but does not exceed ₹2 Crore. total income (including the income by way of dividend or income under the provisions of section 111A, section 112 and section 112A of the Income-tax Act) 25% if income exceeds ₹ 2 Crores. If total income exceeds ₹ 2 crore after excluding the income by way of dividend or income under the provisions of section 111A, section 112 and section 112A of the Income-tax Act - Then Surcharge rate apply 25% If total income exceeds ₹ 2 crore with including the income by way of dividend or income under the provisions of section 111A, section 112 and section 112A of the Income-tax Act - Then Surcharge rate apply 15% Surcharge rate shall not exceeds 15% - in case of AOP consisting of only companies as its members. [Amended by FA, 2023] Note:- Surcharge rate applicable on income dividend or Short Term Capital Gain u/s 111A Long Term Capital Gain u/s 112A and u/s 112 for above ₹ 50 Lakhs but does not exceed 1 Crores - 10% of such dividend or STCG/LTCG. Surcharge rate applicable on income dividend or Short Term Capital Gain u/s 111A Long Term Capital Gain u/s 112A and u/s 112 for above ₹ 1 Crores - 15% of such Dividend or STCG/LTCG. Higher rate of surcharge @37% is not applicable for the AY 2024-25 2025-26 Health Cess shall be 4% always. Alternate Minimum Tax Assessee opting for section 115BAC is not required to pay AMT. Brought forward AMT credit cannot be set off against income u/s 115BAC. Therefore, if assessee has b/f AMT credit, it should first exhaust the AMT Credit and then thereafter opt for section 115BAC. Conditions :- Assessee does not claim following deductions/exemptions:- Salary Income Sec 10(5) [ Leave Travel Concession] Sec 10(13A) [House Rent Allowance] Sec 10(14) [special allowances except following prescribed items: Transport allowance granted to Divyang Employees Conveyance Allowance Any allowance to meet the cost of travel or on transfer Allowance to meet the ordinarily daily charges incurred by employee Sec 10(17) [Allowances to MPs or MLAs] Sec 16 clause (ii) or clause (iii) [, entertainment allowance professional tax ] Allowed standard Deduction under clause (ia) from A.Y. 01.04.2024 Income under the head House Property Interest under section 24(b) for Self-occupied property. Loss from House Property can be set off against Income from House Property. However, it cannot be set-off against any other head of income. Set-off of House Property Loss (Let out/Deemed to be let-out) against other head, however house property loss can be carried forward as per law. Under the Head Profits and Gains from Business and Profession Sec 32(1)(iia) [Additional depreciation] Sec 32AD [Investment in new plant or machinery in notified backward areas] Sec 33AB [Tea, Coffee, Rubber development account] Sec 33ABA [ Site Restoration Fund ] Sec 35(1)(ii)/(iia)/(iii) or Section 35(2AA) [Certain payments to research association, university, college, national laboratory, etc.] Sec 35AD [Investment linked deduction] Sec 35CCC [Expenditure on agricultural extension project] Any brought forward loss of A.Y. 2020-21 and earlier Assessment Years which is because of 32AD, 33AB, 35(1)(ii)/(iia)/(iii), 35(2AA), 35AD, 35CCC shall not be allowed to be carried forward and set-off. the same will lapse. Also, same with Unabsorbed Depreciation on account of Additional Depreciation. Current year house property loss cannot be set- off against any other head of income. Sec 10AA [Exemption for SEZ units] In case assessee opting for first time to file ROI u/s 115BAC(1A) any balance in depreciation allowance in respect of block of asset before 01-04-2024, corresponding adjustment can be made in WDV of block of asset as on 01-04-2023. [ Amendment by FA, 2023, proviso added for assessee opting to file ROI u/s 115BAC(1A) ]. Under head IFOS Allowance for income of minor u/s 10(32 ) [Exemption for minor s income upto ₹1500/-].. Sec 57(iia) [Deduction from family pension] [ allowed w.e.f. 01.04.2024 vide Finance Act, 2023 ] Deduction under chapter VI-A except following :- Sec 80CCD(2) [Employer s contribution to Pension Fund] Sec 80CCH(2) [CG s contribution to Agnipath Scheme] [Inserted vide FA, 2023 ] Sec 80JJAA [Deduction for additional employee cost] Sec 80LA [in case of unit located IFSC which fulfils the conditions specified therein]. [Amendment by FA, 2023 - In case of a person, having a Unit in the International Financial Services Centre, as referred to in section 80LA(1A), which has exercised option under section 115BAC(5) for any previous year relevant to the assessment year beginning on or after the 1st day of April, 2021 but before the 1st day of April, 2024. whose total income is computed under section 115BAC(1A), the conditions contained in section 115BAC(2) shall be modified to the extent that the deduction under section 80LA shall be available to such Unit subject to fulfilment of the conditions contained in the said section. The option has to be exercise in FORM 10-IEA along with ROI to be furnished u/s 139(1). [Section 115BAC(5) (6) has been inserted vide FA, 2023 Read with Rule 21AGA ] In case of Individual/HUF not having income from business/profession : The assessee can opt for the section every year on or before the due date of filing of return. The important thing to bear in mind here is that if the return is a belated one, then the assessee cannot opt for this scheme. So, the assesses wanting to opt for this scheme should keep this in mind and opt for it before the due date of filing return even if the return would be a belated one. In case Individual/HUF having income from business/profession: The assessee has to opt for the section on or before the due date of filing of return. However, Once the option is exercised it can t be withdrawn except assessee cease to have PGBP. In case of assessee opting for file u/s 115BAC(1) as per section 115BAC(5) shall not apply for any previous year relevant to the assessment year beginning on or after the 1st day of April, 2024. [Proviso to 115BAC(5) inserted vide FA, 2023] w.e.f. 01.04.2024 Section 115BAC(1A) shall automatically apply to every assessee however, in case of assessee having PGBP income opting to file return as per section 115BAC(1A) cannot withdrawn to file under same, if once withdrawn cannot opt to exercise to file u/s 115BAC(1A) again except when he ceases to have business income. The withdrawal of option under the proviso to of section 115BAC(6) shall also be in Form No. 10-IEA. [ proviso of Section 115BAC(6) Read with Rule 21AGA(2) ] CBDT clarification for TDS Amendment by the Finance Act, 2023 [ vide Circular No. 04 of 2023 Dated 05, April 2023 ] New tax regime is the default tax regime applicable to all persons mentioned in section 115BAC(1A). However, under section 115BAC(6) of the Act, a person may exercise an option to opt out of this tax regime. A person not having income from business or profession can exercise this option every year. The deductor, being an employer, shall seek information from each of its employees having income under section 192 of the Act regarding their intended tax regime and each such employee shall intimate the same to the deductor, being his employer, regarding his intended tax regime for each year and upon intimation, the deductor shall compute his total income, and deduct tax at source thereon according to the option exercised. If intimation is not made by the employee, it shall be presumed that the employee continues to be in the default tax regime and has not exercised the option to opt out of the new tax regime. Such intimation so made shall only for the purpose of TDS during the PY and cannot be modified during that year. However, at the time of filing of return, employee may take different option. Further, In case of employee having PGBP income shall also intimate to employer. However, the intimation in his case for subsequent PYs must not deviate from option u/s 115BAC once exercised in a PY. 4. Rebate under section 87A [ Proviso to section 87A ] In case where Total Income does not exceeds from ₹ 7 lakhs :- the assessee shall be entitled to a deduction from the amount of income-tax on his total income with which he is chargeable for any assessment year, an amount equal to 100% of such income-tax or an amount of ₹ 25000, whichever is less ; In case where Total Income does exceeds from ₹ 7 lakhs :- the assessee shall be entitled to a deduction from the amount of income-tax on his total income with which he is chargeable for any assessment year, an amount equal to the amount by which the income-tax payable on such total income is in excess of the amount by which the total income exceeds ₹ 7 lakhs. Example Particular Situation 1 ₹ Situation 2 ₹ Situation 3 ₹ Net Income (A) 7,27,000 7,30,000 7,50,000 Tax on net income under alternative tax regime (B) 27,700 28,000 30,000 Less:- Amount Deductible as per proviso (b) to section 87A - Excess of ₹ 7,00,000 - Rebate u/s 87A (B-C) (C) (D) 27,000 700 30,000 - 50,000 - Income tax after rebate u/s 87A (B-D) (E) 27,000 28,000 30,000 Add:- Health and Education Cess 4% (F) 1,080 1,120 1,200 Total Tax payable (E+F) (G) 28,080 29,120 31,200 ================================ Rate of Tax for the Assessment Year 2021-22 to 2023-24 Section 115BAC(1) : Tax on Individual HUF (Resident/Non-Resident) Added by Finance Act 2020 , w.e.f. Assessment Year 2021-22 to 2023-24) For any previous year relevant to the assessment year beginning on or after the 1st day of April, 2021 but before the 1st day of April, 2024 , shall, at the option of such person, be computed at the rate of tax given in the following Table- TABLE Sl. No. Total income Rate of tax (1) (2) (3) 1. Up to ₹ 2,50,000 Nil 2. From ₹ 2,50,001 to ₹ 5,00,000 5 per cent. 3. From ₹ 5,00,001 to ₹ 7,50,000 10 per cent. 4. From ₹ 7,50,001 to ₹ 10,00,000 15 per cent. 5. From ₹ 10,00,001 to ₹ 12,50,000 20 per cent. 6. From ₹ 12,50,001 to ₹ 15,00,000 25 per cent. 7. Above ₹ 15,00,000 30 per cent.: Special Income under section 111A , 112 , 112A shall be taxable @ Special rates. Surcharge 10% if income exceeds ₹ 50 Lakhs but does not exceed 15% if income exceeds ₹ 1 Crores. 25% if income exceeds ₹ 2 Crores. 37% if income exceeds ₹ 5 Crores. Note : Surcharge on short term capital gain u/s 111A Long term capital gain u/s 112A and u/s 112 for above ₹ 50 Lakhs but does not exceed 1 Crores - 10% of such STCG/LTCG. Surcharge on short term capital gain u/s 111A Long term capital gain u/s 112A and u/s 112 for above ₹ 1 Crores - 15% of such STCG/LTCG. Health Cess shall be 4% always. Alternate Minimum Tax Assessee opting for section 115BAC is not required to pay AMT. Brought forward AMT credit cannot be set off against income u/s 115BAC. Therefore, if assessee has b/f AMT credit, it shoul first exhaust the AMT Credit and then thereafter opt for section 115BAC. Conditions :- Assessee does not claim following deductions/exemptions :- Salary Income Sec 10(5) [ Leave Travel Concession] Sec 10(13A) [House Rent Allowance] Sec 10(14) [special allowances except following prescribed items: a) Transport allowance granted to Divyang Employees b) Conveyance Allowance c) Any allowance to meet the cost of travel or on transfer d) Allowance to meet the ordinarily daily charges incurred by employee Sec 10(17) [Allowances to MPs or MLAs] Sec 16 [Standard deduction, entertainment allowance professional tax] Income under the head House Property Interest under section 24(b) for Self-occupied property. Loss from House Property can be set off against Income from House Property. However, it cannot be set-off against any other head of income. Set-off of House Property Loss (Let out/Deemed to be let-out) against other head, however house property loss can be carried forward as per law. Under the Head Profits and Gains from Business and Profession Sec 32(1)(iia) [Additional depreciation] Sec 32AD [Investment in new plant or machinery in notified backward areas] Sec 33AB [Tea, Coffee, Rubber development account] Sec 33ABA [ Site Restoration Fund ] Sec 35(1)(ii)/(iia)/(iii) or Section 35(2AA) [Certain payments to research association, university, college, national laboratory, etc.] Sec 35AD [Investment linked deduction] Sec 35CCC [Expenditure on agricultural extension project] Sec 57(iia) [Deduction from family pension] Any brought forward loss of A.Y. 2020-21 and earlier Assessment Years which is because of 32AD, 33AB, 35(1)(ii)/(iia)/(iii), 35(2AA), 35AD, 35CCC shall not be allowed to be carried forward and set-off. the same will lapse. Also, same with Unabsorbed Depreciation on account of Additional Depreciation. Current year house property loss cannot be set- off against any other head of income. Sec 10AA [Exemption for SEZ units] Under head IFOS Allowance for income of minor u/s 10(32 ) [Exemption for minor s income upto Rs. 1500/-].. Deduction for Family Pension u/s 57 Deduction under chapter VI-A except following :- Sec 80CCD(2) [Employer s contribution to Pension Fund] Sec 80JJAA [Deduction for additional employee cost] Sec 80LA [in case of unit located IFSC which fulfils the conditions specified therein]. The option has to be exercise in FORM 10-IE along with ROI to be furnished u/s 139(1). In case of Individual/HUF not having income from business/profession : The assessee can opt for the section every year on or before the due date of filing of return. The important thing to bear in mind here is that if the return is a belated one, then the assessee cannot opt for this scheme. So, the assesses wanting to opt for this scheme should keep this in mind and opt for it before the due date of filing return even if the return would be a belated one. In case Individual/HUF having income from business/profession: The assessee has to opt for the section on or before the due date of filing of return. However, Once the option is exercised it can t be withdrawn except assessee cease to have PGBP. Rebate under section 87A is available even if assessee opts for section 115BAC. CBDT clarification for TDS [ vide Circular No. C1/2020 dated 13, April 2020 ] Employee opting for section 115BAC is required to intimate his employer, the employer shall deduct TDS as per section 115BAC If such intimation is not made by the employee to his employer then TDS will be deduct as per the normal provisions. If intimation so made shall only for the purpose of TDS during the PY and cannot be modified during that year. However, at the time of filing of return, employee may take different option. Further, In case of employee having PGBP income shall also intimate to employer. However, the intimation in his case for subsequent PYs must not deviate from option u/s 115BAC once exercised in a PY. 5. Rebate u/s 87A shall be allowed on amount of income tax deducted or ₹ 12,500/- whichever is less in case of assessee having total income upto ₹ 5 lakhs. [ From A.Y. 2021-22 to 2023-24]