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Know about normal and Special Income tax rates applicable to different types of taxpayers for financial year 2020-21 (for assessment year 2021-22)

Article compiles Normal Income Tax rates for Individual & HUF, Special Income Tax Rate for Individual and HUFs, Normal Income Tax Rate applicable to a firm, Normal Income Tax rates applicable to a domestic company, Special Income Tax rates applicable to a domestic company, Normal tax rates applicable to a foreign company, Normal tax rates applicable to a Co-operative societies, Special tax rates applicable to a Co-operative societies and Normal tax rates applicable to local authorities

for Financial Year 2020-21 i.e. for assessment year 2021-22. The normal tax rates applicable to a resident individual will depend on the age of the individual. However, in case of a non-resident individual the tax rates will be same irrespective of his age. For the purpose of ascertainment of the applicable tax slab, an individual can be classified as follows:

  • Resident individual below the age of 60 years.
  • Resident individual of the age of 60 years or above at any time during the year but below the age of 80 years.
  • Resident individual of the age of 80 years or above at any time during the year.
  • Non-resident individual irrespective of the age.

Individuals
(Other than senior and super senior citizen)

Net Income Range Rate of Income-tax

Up to Rs. 2,50,000

-

Rs. 2,50,000 to Rs. 5,00,000

5%

Rs. 5,00,000 to Rs. 10,00,000

20%

Above Rs. 10,00,000

30%

Senior Citizen (who is 60 years or more at any time during the previous year)

Net Income Range Rate of Income-tax

Up to Rs. 3,00,000

-

Rs. 3,00,000 to Rs. 5,00,000

5%

Rs. 5,00,000 to Rs. 10,00,000

20%

Above Rs. 10,00,000

30%

Super Senior Citizen (who is 80 years or more at any time during the previous year)

Net Income Range Rate of Income-tax

Up to Rs. 5,00,000

-

Rs. 5,00,000 to Rs. 10,00,000

20%

Above Rs. 10,00,000

30%

 

 

Hindu Undivided Family (Including AOP, BOI and Artificial Juridical Person)

Net Income Range Rate of Income-tax

Up to Rs. 2,50,000

-

Rs. 2,50,000 to Rs. 5,00,000

5%

Rs. 5,00,000 to Rs. 10,00,000

20%

Above Rs. 10,00,000

30%

Surcharge: Surcharge is levied on the amount of income-tax at following rates if total income of an assessee exceeds specified limits:-

Rate of Surcharge (Assessment Year 2021-22)

Range of Income

Rs. 50 Lakhs - Rs. 1 Crore Rs. 1 Crore - Rs. 2 Crores Rs. 2 Crores - Rs. 5 Crores Rs. 5 Crores - Rs. 10 Crores Exceeding Rs.10 Crores
10% 15% 25% 37% 37%

Note: The enhanced surcharge of 25% & 37%, as the case may be, is not levied, from income chargeable to tax under sections 111A, 112A and 1 15AD. Hence, the maximum rate of surcharge on tax payable on such incomes shall be 15%.

However, marginal relief is available from surcharge in following manner-

  • In case where net income exceeds Rs. 50 lakh but doesn’t exceed Rs. 1 Crore, the amount payable as income tax and surcharge shall not exceed the total amount payable as income tax on total income of Rs 50 Lakh by more than the amount of income that exceeds Rs 50 Lakhs.
  • In case where net income exceeds Rs. 1 crore but doesn’t exceed Rs. 2 crore, marginal relief shall be available from surcharge in such a manner that the amount payable as income tax and surcharge shall not exceed the total amount payable as income-tax on total income of Rs. 1 crore by more than the amount of income that exceeds Rs. 1 crore.
  • In case where net income exceeds Rs. 2 crore but doesn’t exceed Rs. 5 crore, marginal relief shall be available from surcharge in such a manner that the amount payable as income tax and surcharge shall not exceed the total amount payable as income-tax on total income of Rs. 2 crore by more than the amount of income that exceeds Rs. 2 crore.
  • In case where net income exceeds Rs. 5 crore, marginal relief shall be available from surcharge in such a manner that the amount payable as income tax and surcharge shall not exceed the total amount payable as income-tax on total income of Rs. 5 crore by more than the amount of income that exceeds Rs. 5 crore.

Health and Education Cess: Health and Education Cess is levied at the rate of 4% on the amount of income-tax plus surcharge. The Finance Act, 2020, has provided an option to Individuals and HUF for payment of taxes at the following reduced rates from Assessment Year 2021-22 and onwards -

Total Income (Rs) Rate

Up to Rs. 2,50,000

Nil

Rs. 2,50,001 to Rs. 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%

AMT - The assessee opting for this scheme have been kept out of the purview of Alternate Minimum Tax (AMT). Further the provision relating to the computation, carry forward and set off of AMT credit shall not apply to these assessees.

Note: A resident individual (whose net income does not exceed Rs. 5,00,000) can avail rebate under section 87A. It is deductible from income-tax before calculating education cess. The amount of rebate is 100 per cent of income-tax or Rs. 12,500, whichever is less.

Conditions to be satisfied:

The option to pay tax at lower rates shall be available only if the total income of assessee is computed without claiming following exemptions or deductions -

  • Leave Travel concession [Section 10(5)]
  • House Rent Allowance [Section 10(13A)]
  • Official and personal allowances (other than those as may be prescribed) [Section 10(14)]
  • Allowances to MPs/MLAs [Section 10(17)]
  • Allowances for income of minor [Section 10(32)]
  • Deduction for units established in Special Economic Zones (SEZ) [Section 10AA]
  • Standard Deduction [Section 16(ia)]
  • Entertainment Allowance [Section 16((ii)]
  • Professional Tax [Section 16(iii)]
  • Interest on housing loan [Section 24(b)]
  • Additional depreciation in respect of new plant and machinery [Section 32(1)(iia)]
  • Deduction for investment in new plant and machinery in notified backward areas [Section 32AD]
  • Deduction in respect of tea, coffee or rubber business [Section 33AB]
  • Deduction in respect of business consisting of prospecting or extraction or production of petroleum or natural gas in India [Section 33ABA]
  • Deduction for donation made to approved scientific research association, university college or other institutes for doing scientific research which may or may not be related to business [Section 35(1) (ii)]
  • Deduction for payment made to an Indian company for doing scientific research which may or may not be related to business [Section 35(1)(iia)]
  • Deduction for donation made to university, college, or other institution for doing research in social science or statistical research [Section 35(1) (iii)]
  • Deduction for donation made for or expenditure on scientific research [Section 35(2AA)]
  • Deduction in respect of capital expenditure incurred in respect of certain specified businesses, i.e., cold chain facility, warehousing facility, etc. [Section 35AD]
  • Deduction for expenditure on agriculture extension project [Section 35CCC]
  • Deduction for family Pension [Section 57(iia)]
  • Deduction in respect of certain incomes other than specified under Section 80JJAA, 80CCD(2) and deduction under section 80LA for Unit located in IFSC [Part C of Chapter VI-A]

Total income of the assessee is calculated after claiming depreciation under section 32, other than additional depreciation, and without adjusting brought forward losses and depreciation from any earlier year (if such loss or depreciation pertains to any deduction under the aforesaid sections). Further, loss under the head house property can’t be set off against other heads of Income. Moreover, such loss and depreciation will not be carried forward.

If the assessee has any unabsorbed depreciation, relating to additional depreciation, which has not been given full effect, the corresponding adjustment shall be made to WDV of the block of assets in the prescribed manner.

In case the assessee has business or professional income, this option shall be exercised on or before the due date for furnishing the returns of income. Once the assessee has exercised the option for any previous year, it cannot be subsequently withdrawn for the same or any other previous year. The option once exercised for any previous year can be withdrawn only once in subsequent previous year (other than the year in which it was exercised) and thereafter, he shall never be eligible to exercise this option again except where such person ceases to have any business income.

If assessee does not have business or professional income, the option must be exercised along with the return of income for every previous year. If an assessee, after opting for Section 115BAC, claims any of prescribed deduction or allowance in any previous year, then the option to pay tax at concessional rate shall become invalid for that year.





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Advisory on Opting-in for Composition Scheme for 2020-21 – Extension of Dates in view of COVID-19 pandemic

Due to COVID-19 pandemic and challenges faced by taxpayers, Government has extended dates for opting for composition scheme by normal taxpayers, for the financial year 2020-21. These are notified in Notifications 30/2020 Central Tax, dated 03.04.2020. Circular No. 136/06/2020-GST dated 3rd April, 2020 has also been issued. Existing Normal taxpayers who want to opt for Composition Scheme in Financial Year 2020-21 may note following changes:

Revised date to file Form GST CMP 02: Normal and registered taxpayers who want to opt in for Composition in FY 2020-21 can apply in Form GST CMP-02 by 30th June 2020. No GSTR 1 or 3B must be filed in 2020-21 financial year for associated PAN: The taxpayers SHOULD NOT file any GSTR-1/GSTR-3B, for any tax period of FY 2020-21, from any of the GSTIN on the associated PAN, or else they will not be able to opt for composition scheme for FY 2020-21. No need for re-opting for the composition scheme: The taxpayers who are already in composition scheme, in previous financial year are not required to opt in for composition again for FY 2020-2021. Revised date to file Form GST ITC 03: Form GST ITC-03 to reverse ITC for the stock in hand at the time of transition can be filed till 31st July, 2020. Modification in earlier advisory date 18.02.2020: The advisory issued on 18.02.2020 and available on GST Portal (click here for the link https://www.gst.gov.in/newsandupdates/read/356) stands modified to above extent.




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File FORM GST PMT 09, to transfer/shift the money available in Electronic Cash ledger, between various major and minor heads of GST

Taxpayers deposit money using challan and the paid amount gets credited in the particular head in the Electronic Cash ledger and the same can be utilized in settling liabilities of that head only. In case a taxpayer deposited any amount under a major head i.e. IGST, CGST, SGST/UTGST and Cess or minor head i.e. Tax, Interest, Penalty, Fee and Others, they can then utilize this amount for discharging their liabilities only under that major head and minor head. Sometimes, inadvertently, the taxpayer pays

the amount under the wrong head and it cannot be used to discharge the liabilities which may be due in another head. In such cases taxpayers can claim the refund of the amount which may have been deposited under wrong head in GST by filing a refund application in FORM RFD-01 under the category “Excess balance in electronic cash ledger”. The process of filing refund claim and its disbursement can sometimes lead to blockage of funds for the taxpayer.

Form GST PMT-09 is now available on GST portal and it enables a taxpayer to make intra-head or inter-head transfer of amount available in Electronic Cash Ledger. A taxpayer can file GST PMT 09 for transfer of any amount of tax, interest, penalty, fee or others available under one (major or minor) head to another (major or minor) head in the Electronic Cash Ledger. Form GST PMT 09 provides flexibility to taxpayers to make multiple transfers from more than one Major/Minor head to another Major/Minor head if the amount is available in the Electronic Cash Ledger. To file Form GST PMT-09 taxpayers are required to login on GST portal with valid credentials and navigate to Services > Ledgers > Electronic Cash Ledger > File GST PMT-09 For Transfer of Amount option. After Form GST PMT-09 is filed -

  • ARN is generated on successful filing of Form GST PMT-09
  • An SMS and an email is sent to the taxpayer on his registered mobile and email id
  • Electronic Cash ledger will get updated after successful filing of Form GST PMT-09
  • Filed form GST PMT-09 will be available for view/download in PDF format.





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CBDT notifies Income Tax Cost Inflation Index for Financial Year 2020-21 or Assessment Year 2021-22

vide  Notification No. 32/2020-Income Tax dated 12th June 2020 at 301. Cost Inflation Index helps taxpayer calculation his Long Term Capital Gain on sale of Long Term Capital Assets

 

S.O. 1879(E). — In exercise of the powers conferred by clause (v) of the Explanation to section 48 of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby makes the following further amendments in the notification of the Government of India, Ministry of Finance (Department of Revenue), Central Board of Direct Taxes, published in the Gazette of India, Extraordinary, vide number S.O. 1790(E), dated the 5th June, 2017, namely:

2. In the said notification, in the Table, after serial number 19, the following serial number and entries relating thereto, shall be inserted, namely:—

Sl. No. Financial Year Cost Inflation Index

( 1 )

(2)

(3)

“20

2020-21

301″

3. This notification shall come into force with effect from 1st day of April, 2021 and shall accordingly apply to the assessment year 2021-22 and subsequent years.

[Notification No. 32/2020/F.No. 370142/17/2020-TPL] ANKIT JAIN, Under Secy. (Tax Policy and Legislation)

Note:- The principal notification was published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (ii), vide number S.O. 1790(E), dated the 5th June, 2017 and last amended by the notification number S.0.3266 (E), dated the 12 th  September,2019.




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CHECKLIST FOR RECONCIALATION OF BOOKS OF ACCOUNT between GST PORTAL RECORDS

Nowadays Every business organization is engaged in finalizing books of accounts and preparation of Balance Sheet for each financial year.

To Understand easily we have prepared Reconciliation check list between Books of Account and GST Portal Records (which have already filled).

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