With the introduction of tax regime under section 115BAC [New tax regime], there is lot of confusion about what are the tax rates, how rebate will be allowed or surcharge will be charged, as applicable, what are the deductions allowed or disallowed. Here is a summary to understand the provisions-
Tax rates in case of default regime – Section 115BAC
| Individuals, HUF & AJP | ||||
| Total Income | Tax rate | Surcharge (percentage to be applied on tax amount) | ||
| Upto 3L | – | Total Income | Surcharge | |
| >3L to 7L | 5% | Upto 50L | – | |
| >7L to 10L | 10% | >50L to 1Cr | 10% | |
| >10L to 12L | 15% | >1Cr to 2Cr | 15% | |
| >12l to 15L | 20% | >2Cr | 25% | |
| >15L | 30% | |||
| If special income is included | ||||
| Special Income | Tax rate | Total Income | Rate of Surcharge | |
| Dividend | Slab | Upto 50L | – | |
| LTCG (112A) | 10% / 12.5% (Exempt: 1.25L) | >50L to 1Cr | 10% | |
| LTCG (112) | 10% / 12.5% / 20% | >1Cr | 15% | |
| STCG (111A) | 15% / 20% | |||
| Rules for calculating surcharge | ||||
| 1. Check total income excluding special income as separate criteria for applying surcharge if total income is > Rs. 2Cr.
2. Before charging surcharge on dividend income, calculate proportionate tax as dividend is chargeable at slab rates. 3. If total income after excluding special income is > Rs. 2Cr then surcharge 25%. |
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| Deductions allowed – 80JJAA – additional cost on hiring of new employees, 80CCD(2) – Contribution by employer towards NPS, 80CCH(2) – Contribution by Central Government towards Agniveer Corpus Fund, 80LA – Deduction for IFSC Units | ||||
| Deductions disallowed – 10AA – Export profits, 16(ii) – Professional tax, 16(iii) – Entertainment allowance, 10(5) – Leave Travel concession, 10(13A) – House Rent Allowance, 10(14) – except travel allowance to disabled, travelling and tour allowance, daily allowance, conveyance allowance, 24(b) – Interest on loan for self-occupied property, set-off HP loss against other head, 32(1)(iia) – Additional depreciation, 33AB – Benefits for tea, coffee and rubber industry, 33ABA – Site restoration of petroleum and natural gas business, 35(1)(ii) – Amount paid to research association, college, university or institution, 35(1)(iia) – Amount paid for scientific research to a Company, 35(1)(iii) – Any sum paid for social science or statistical research, 35(2AA) – any sum paid to a National Laboratory or a University or an Indian Institute of Technology, 35AD – Specified business, 35CCC – Agricultural Extension project, Ch VI-A – except those specifically allowed as above. | ||||
| Other points
1. AMT credit cannot be adjusted. It will lapse if opted for new regime. 2. If any additional depreciation is brought forward then it will added back to WDV as cost in the first year of opting this regime. |
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| Now this is the default regime (It can be opted out in following ways) | ||||
| Having business income | Does not have business income | |||
| Option to be exercised in Form 10-IEA upto ITR due date u.s. 139(1).
Can go back to old regime once. If opted new regime after going back to old regime, then coming back to old regime is not allowed till there exist business income. |
Option to be exercised with ITR | |||
Tax rates in case of old regime – Traditional slab
| Individuals, HUF and AJP (except Senior and super senior citizens) | Individuals (>= 60 years)- Senior | Individuals (>= 80 years)- Super senior | ||||
| Only for Residents and not Non-residents | ||||||
| Total Income | Tax rate | Total Income | Tax rate | Total Income | Tax rate | |
| Upto 2.5L | – | Upto 3L | – | Upto 5L | – | |
| >2.5L to 5L | 5% | >3L to 5L | 5% | >5L to 10L | 20% | |
| >5L to 10L | 20% | >5L to 10L | 20% | >10L | 30% | |
| >10L | 30% | >10L | 30% | |||
| Surcharge (percentage to be applied on tax amount. Criteria- Total Income) | ||||||
| Total Income | Rate of surcharge | Effective rate – Including cess | ||||
| Upto 50L | – | 30% | ||||
| >50L to 1Cr | 10% | 34.32% | ||||
| >1Cr to 2Cr | 15% | 35.88% | ||||
| >2Cr to 5Cr | 25% | 39% | ||||
| >5Cr | 37% | 42.744% | ||||
| If special income is included | ||||||
| Special Income | Tax rate | Surcharge | ||||
| Dividend | Slab | Total Income | Rate of Surcharge | |||
| LTCG (112A) | 10% / 12.5% (Exempt: 1.25L) | Upto 50L | – | |||
| LTCG (112) | 10% / 12.5% / 20% | >50L to 1Cr | 10% | |||
| STCG (111A) | 15% / 20% | >1Cr | 15% | |||
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