DIRECT TAX

INCOME TAX RATES

No changes proposed in the slabs of personal tax rate. Accordingly, the rate of tax as applicable for AY 2021-22 is as under:

Income (INR) Existing and Proposed Rates (%)
Individuals (Age < 60 years) and HUF, BOI, AOP Individual senior citizens (Age > 60 years < 80 years) Individual super senior citizens (Age > 80 years)
– 2,50000 NIL NIL NIL
250,001 – 300,000 5 NIL NIL
300,001 – 500,000 5 5 NIL
500,001 – 1,000,000 20 20 20
1,000,001 and above 30 30 30

An alternative conditional personal income-tax regime has been proposed. This would be available as an option to the above existing tax regime. The rate of tax applicable under the proposed regime are as under:

Income (INR) Proposed Rates (%)
Individuals and HUF
0 - 250,000 NIL
250,001 - 500,000 5
500,001 - 750,000 10
750,001 - 1,000,000 15
1,000,001 - 1,250,000 20
1,250,001 – 1,500,000 25
1,500,001 and above 30

Rebate, Surcharge & Cess

Sr. No. Particulars Existing & Proposed
1 Rebate
  • INR 12,500 – If total income does not exceed INR 500,000
2 Surcharge (for income other than Capital Gains)
  • 10% - If total income > INR 5 million but ≤ INR 10 million
  • 15% - If total income > INR 10 million, but ≤ INR 20 million
  • 25% - If total income > INR 20 million, but ≤ INR 50 million
  • 37% - If total income > INR 50 million
3 Surcharge (for Capital Gains – i.e. Section 111A & 112A of the IT Act)
  • 10% - If total income > INR 5 million but ≤ INR 10 million
  • 15% - If total income > INR 10 million
4 Cess - Health and Education cess
  • 4%
5 AMT
(including surcharge and cess)
  • 19.24% - If adjusted total income > INR 2 million, but ≤ INR 5 million
  • 21.16% - If adjusted total income > INR 5 million, but ≤ INR 10 million
  • 22.13% - If adjusted total income > INR 10 million, but ≤ INR 20 million
  • 24.05% - If adjusted total income > INR 20 million, but ≤ INR 50 million
  • 26.36% - If adjusted total income > INR 50 million

Below is a comparative analysis of these alternative regimes:

Particulars Existing Proposed Existing Proposed
Total Income > INR 1 million Total Income > INR 1 million Total Income > INR 1.5 million Total Income > INR 1.5 million
Total Income (assumed) 1,000,000 1,000,000 2,500,000 2,500,000
Deduction under Section 80C (1,50,000) - (1,50,000) -
Net total Income 8,50,000 1,000,000 23,50,000 2,500,000
Total Tax payable

(as per slab rates)

 82,500 75,000 5,17,500 4,87,500
Add: Health & Education Cess (@4%) 3,300 3,000 20,700 19,500
Total tax payable 85,800 78,000 5,38,200 5,07,000
Effective tax rate (i.e. total tax payable/ total income) 8.58% 7.80% 21.53% 20.28%

For Companies, Firms, LLP

Sr. No. Description Existing rates (%)
(Including surcharge & Cess)		 Proposed rates (%)
(Including surcharge & Cess)
(A) Domestic Companies Net income ≤ INR 1 crore Net Income > INR 1 crore, but ≤ INR 10 crore Net income > INR 10 crore Net income ≤ INR 1 crore Net Income > INR 1 crore, but ≤ INR 10 crore Net income > INR 10 crore
1 Turnover or gross receipts in previous year 2017-18 ≤ INR 400 crore (base rate – 30%) 26.00 27.82 29.12 26.00 27.82 29.12
2 Covered under Section 115BA (base rate – 25%) 26.00 27.82 29.12 26.00 27.82 29.12
3 Covered under Section 115BAA (base rate – 22%) 25.17 25.17
4 Covered under Section 115BAB (base rate – 15%) 17.16 17.16
5 Any other Company having turnover or gross receipts in previous year 2017-18 > INR 400 crore 31.20 33.38 34.94 31.20 33.38 34.94
6 MAT under Section 115JB

for companies other than that covered under Section 115BAA and 115BAB (Rate to be applied on book profits – base rate 15%)

 15.60 16.69 17.47 15.60 16.69 17.47
7 BBT under Section 115QA

(base rate -20%)

 23.30 23.30
8 DDT under Section 115-O

(without grossing up; base rate – 15%)

 17.47 Nil
(B) Foreign Companies Net income ≤ INR 1 crore Net Income > INR 1 crore, but ≤ INR 10 crore Net income > INR 10 crore Net income ≤ INR 1 crore Net Income > INR 1 crore, but ≤ INR 10 crore Net income > INR 10 crore
1 Regular tax (base rate – 40%) 41.60 42.43 43.68 41.60 42.43 43.68
(C) Firms and LLP Net income ≤ INR 1 crore Net income > INR 1 crore Net income ≤ INR 1 crore Net income > INR 1 crore
1 Regular tax (base rate – 30%) 31.2 34.94 31.2 34.94
Adjusted total income ≤ INR 1 crore Adjusted total income > INR 1 crore Adjusted total income ≤ INR 1 crore Adjusted total income > INR 1 crore
2 AMT (base rate – 18.5%) 19.24 21.55 19.24 21.55

Surcharge and Cess

Particulars Existing & Proposed
Other domestic companies
  • NIL - If total income ≤ INR 1 crore
  • 7% - If total income > INR 1 crore, but ≤ INR 10 crore
  • 12% - If total income > INR 10 crore
For Domestic companies covered under Section 115BAA and Section 115BAB of the IT Act
  • 10% - Irrespective of the amount of total income
For Foreign companies
  • NIL - If total income ≤ INR 1 crore
  • 2% - If total income > INR 1 crore, but ≤ INR 10 crore
  • 5% - If total income > INR 10 crore
For Firms and LLP
  • 12% - If total income > INR 1 crore
Cess - Health and Education cess
  • 4%

Download: Union Budget 2020 – Direct Tax – An Analysis

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