Generally, income is taxed in the hands of the person who earns it. However, Sections 60 to 64 provide the provisions for clubbing of income in specified cases to curb tax avoidance through indirect transfers or arrangements.
Transfer of Income without transferring the Assets
If income is transferred without transferring the asset, such income is clubbed with the income of the transferor, irrespective of whether the transfer is revocable or irrevocable, and regardless of when it was made.
Revocable Transfer of Assets
If an asset is transferred with a provision for retransfer or the right to reassume control, the income from such asset is clubbed with the transferor’s income.
Exceptions
Clubbing does not apply if:
(a) The transfer is irrevocable during the lifetime of the transferee, and
(b) Transfer before 01-04-1961 which isn’t revocable for period exceeding 6 years. If the power to revoke arises later, income is clubbed from that point onward.
Clubbing of Income of Specific Relations
(a) Spouse
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- Remuneration: Income of spouse from a concern in which the other spouse has a substantial interest is clubbed, unless attributable to technical/professional qualifications.
- Meaning of Substantial Interest: An individual has substantial interest if he/she (alone or with relatives) holds ≥20% voting power in a company or≥20% profit share in a non-corporate entity at any time during the year.
- Transfer of Asset: If an asset is transferred to a spouse without adequate consideration, income from such asset is clubbed with the transferor. However, income from the accretion of transferred assets or assets transferred under an agreement to live apart is not clubbed.
- Asset invested in Business: If the transferred asset is invested in business, the income is clubbed proportionately.
- Asset transferred for Spouse’s Benefit: Income arising to another person or AOP from assets transferred for the direct/indirect benefit of the spouse is also clubbed.
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(b) Son’s Wife
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- Transfer of Asset: If an individual transfers an asset to his son’s wife without adequate consideration, the income from it is clubbed with the transferor’s income, provided the father/mother-in-law and daughter-in-law relationship exists both at transfer and at income accrual.
- Asset invested in Business: If the transferred asset is invested in business, the income is clubbed proportionately.
- Asset transferred for benefit of Son’s Wife: Income from an asset transferred without adequate consideration for the benefit of the transferor’s son’s wife is clubbed with the transferor’s income, but only to the extent it benefits her.
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(c) Minor Child
Income of a minor is clubbed with the parent having the higher total income, except:
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- Income up to Rs. 1,500 (exempt per minor child)
- Income from manual work or application of skill/talent
- Income of a minor with disability under Section 80U
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Once income is clubbed with one parent, it remains so unless reassigned by the AO with the opportunity of hearing.
(d) Property Gifted to HUF
Income from personal property converted to HUF property is taxable in the hands of the individual who made the conversion. If property is partitioned and the spouse receives a share, income from such share is clubbed proportionately.
Computation and Tax Treatment
(a) Income is computed in the hands of the recipient under the relevant head before clubbing.
(b) Losses are also subject to clubbing.
(c) Clubbed income retains the character of the original head.
Tax Liability of Transferee
While income is taxed in the hands of the transferor, the transferee may be served a notice of demand and held liable to the extent of tax attributable to the clubbed income.
Extract of Relevant Sections under Income Tax Act, 1961
INCOME OF OTHER PERSONS, INCLUDED IN ASSESSEE’S TOTAL INCOME
Income-tax Act, 1961 – Section – 60 – Transfer of income where there is no transfer of assets.
60. All income arising to any person by virtue of a transfer whether revocable or not and whether effected before or after the commencement of this Act shall, where there is no transfer of the assets from which the income arises, be chargeable to income-tax as the income of the transferor and shall be included in his total income.
Section – 61 – Revocable transfer of assets.
61. All income arising to any person by virtue of a revocable transfer of assets shall be chargeable to income-tax as the income of the transferor and shall be included in his total income.
Section – 62 -Transfer irrevocable for a specified period.
62. (1) The provisions of section 61 shall not apply to any income arising to any person by virtue of a transfer—
(i) by way of trust which is not revocable during the lifetime of the beneficiary, and, in the case of any other transfer, which is not revocable during the lifetime of the transferee; or
(ii) made before the 1st day of April, 1961, which is not revocable for a period exceeding six years :
Provided that the transferor derives no direct or indirect benefit from such income in either case.
(2) Notwithstanding anything contained in sub-section (1), all income arising to any person by virtue of any such transfer shall be chargeable to income-tax as the income of the transferor as and when the power to revoke the transfer arises, and shall then be included in his total income.
Section – 63 – “Transfer” and “revocable transfer” defined.
63. For the purposes of sections 60, 61and 62 and of this section,—
(a) a transfer shall be deemed to be revocable if—
(i) it contains any provision for the re-transfer directly or indirectly of the whole or any part of the income or assets to the transferor, or
(ii) it, in any way, gives the transferor a right to re-assume power directly or indirectly over the whole or any part of the income or assets ;
(b) “transfer” includes any settlement, trust, covenant, agreement or arrangement.
Section – 64 – Income of individual to include income of spouse, minor child, etc.
64. (1) In computing the total income of any individual, there shall be included all such income as arises directly or indirectly—
(i) [Omitted by the Finance Act, 1992, w.e.f. 1-4-1993.]
(ii) to the spouse of such individual by way of salary, commission, fees or any other form of remuneration whether in cash or in kind from a concern in which such individual has a substantial interest:
Provided that nothing in this clause shall apply in relation to any income arising to the spouse where the spouse possesses technical or professional qualifications and the income is solely attributable to the application of his or her technical or professional knowledge and experience ;
(iii) [Omitted by the Finance Act, 1992, w.e.f. 1-4-1993.]
(iv) subject to the provisions of clause (i) of section 27, to the spouse of such individual from assets transferred directly or indirectly to the spouse by such individual otherwise than for adequate consideration or in connection with an agreement to live apart;
(v) [Omitted by the Finance Act, 1992, w.e.f. 1-4-1993.]
(vi) to the son’s wife, of such individual, from assets transferred directly or indirectly on or after the 1st day of June, 1973, to the son’s wife by such individual otherwise than for adequate consideration;
(vii) to any person or association of persons from assets transferred directly or indirectly otherwise than for adequate consideration to the person or association of persons by such individual, to the extent to which the income from such assets is for the immediate or deferred benefit of his or her spouse; and
(viii) to any person or association of persons from assets transferred directly or indirectly on or after the 1st day of June, 1973, otherwise than for adequate consideration, to the person or association of persons by such individual, to the extent to which the income from such assets is for the immediate or deferred benefit of his son’s wife.
Explanation 1.—For the purposes of clause (ii), the individual in computing whose total income the income referred to in that clause is to be included, shall be the husband or wife whose total income (excluding the income referred to in that clause) is greater; and where any such income is once included in the total income of either spouse, any such income arising in any succeeding year shall not be included in the total income of the other spouse unless the Assessing Officer is satisfied, after giving that spouse an opportunity of being heard, that it is necessary so to do.
Explanation 2.—For the purposes of clause (ii), an individual shall be deemed to have a substantial interest in a concern—
(i) in a case where the concern is a company, if its shares (not being shares entitled to a fixed rate of dividend whether with or without a further right to participate in profits) carrying not less than twenty per cent of the voting power are, at any time during the previous year, owned beneficially by such person or partly by such person and partly by one or more of his relatives;
(ii) in any other case, if such person is entitled, or such person and one or more of his relatives are entitled in the aggregate, at any time during the previous year, to not less than twenty per cent of the profits of such concern.
Explanation 2A.—[Omitted by the Finance Act, 1992, w.e.f. 1-4-1993.]
Explanation 3.—For the purposes of clauses (iv) and (vi), where the assets transferred directly or indirectly by an individual to his spouse or son’s wife (hereafter in this Explanation referred to as “the transferee”) are invested by the transferee,—
(i) in any business, such investment being not in the nature of contribution of capital as a partner in a firm or, as the case may be, for being admitted to the benefits of partnership in a firm, that part of the income arising out of the business to the transferee in any previous year, which bears the same proportion to the income of the transferee from the business as the value of the assets aforesaid as on the first day of the previous year bears to the total investment in the business by the transferee as on the said day ;
(ii) in the nature of contribution of capital as a partner in a firm, that part of the interest receivable by the transferee from the firm in any previous year, which bears the same proportion to the interest receivable by the transferee from the firm as the value of investment aforesaid as on the first day of the previous year bears to the total investment by way of capital contribution as a partner in the firm as on the said day,
shall be included in the total income of the individual in that previous year.
(1A) In computing the total income of any individual, there shall be included all such income as arises or accrues to his minor child , not being a minor child suffering from any disability of the nature specified in section 80U :
Provided that nothing contained in this sub-section shall apply in respect of such income as arises or accrues to the minor child on account of any—
(a) manual work done by him; or
(b) activity involving application of his skill, talent or specialised knowledge and experience.
Explanation.—For the purposes of this sub-section, the income of the minor child shall be included,—
(a) where the marriage of his parents subsists, in the income of that parent whose total income (excluding the income includible under this sub-section) is greater; or
(b) where the marriage of his parents does not subsist, in the income of that parent who maintains the minor child in the previous year,
and where any such income is once included in the total income of either parent, any such income arising in any succeeding year shall not be included in the total income of the other parent, unless the Assessing Officer is satisfied, after giving that parent an opportunity of being heard, that it is necessary so to do.
(2) Where, in the case of an individual being a member of a Hindu undivided family, any property having been the separate property of the individual has, at any time after the 31st day of December, 1969, been converted by the individual into property belonging to the family through the act of impressing such separate property with the character of property belonging to the family or throwing it into the common stock of the family or been transferred by the individual, directly or indirectly, to the family otherwise than for adequate consideration (the property so converted or transferred being hereinafter referred to as the converted property), then, notwithstanding anything contained in any other provision of this Act or in any other law for the time being in force, for the purpose of computation of the total income of the individual under this Act for any assessment year commencing on or after the 1st day of April, 1971,—
(a) the individual shall be deemed to have transferred the converted property, through the family, to the members of the family for being held by them jointly ;
(b) the income derived from the converted property or any part thereof shall be deemed to arise to the individual and not to the family ;
(c) where the converted property has been the subject-matter of a partition (whether partial or total) amongst the members of the family, the income derived from such converted property as is received by the spouse on partition shall be deemed to arise to the spouse from assets transferred indirectly by the individual to the spouse and the provisions of sub-section (1) shall, so far as may be, apply accordingly:-
Provided that the income referred to in clause (b) or clause (c) shall, on being included in the total income of the individual, be excluded from the total income of the family or, as the case may be, the spouse of the individual.
Explanation 1.—For the purposes of sub-section (2),—
“property” includes any interest in property, movable or immovable, the proceeds of sale thereof and any money or investment for the time being representing the proceeds of sale thereof and where the property is converted into any other property by any method, such other property.
Explanation 2.—For the purposes of this section, “income” includes loss.
Section – 65 – Liability of person in respect of income included in the income of another person.
65. Where, by reason of the provisions contained in this Chapter or in clause (i) of section 27, the income from any asset or from membership in a firm of a person other than the assessee is included in the total income of the assessee, the person in whose name such asset stands or who is a member of the firm shall, notwithstanding anything to the contrary contained in any other law for the time being in force, be liable, on the service of a notice of demand by the Assessing Officer in this behalf, to pay that portion of the tax levied on the assessee which is attributable to the income so included, and the provisions of Chapter XVII-D shall, so far as may be, apply accordingly :
Provided that where any such asset is held jointly by more than one person, they shall be jointly and severally liable to pay the tax which is attributable to the income from the assets so included.
Computation of Tax for Individual
Computation of Tax for Individual
The income taxable in the hands of an individual and tax liability thereon shall be computed according to his residential status. The income taxable under the Income-tax Act is computed under the five heads of income, and tax thereon is computed as per the tax slab rates applicable for that previous year.
Determination of residential status
Income-tax liability of an individual is calculated on the basis of his ‘Total Income’. His residential status in India influences the income to be included in the taxable income. An individual can be categorised into the following residential status during the previous year:
a. Resident in India
b. Resident but Not-ordinarily Resident
c. Non-Resident in India
An individual, who is a resident in India, is liable to pay tax in India on his global income. On the other hand, a non-resident person is liable to pay tax in India only on that income which accrues or arises or is deemed to accrue or arise in India, and income received or deemed to be received in India. However, if the income of an individual is taxable in India and outside India, then he can claim a foreign tax credit in respect of such income.
Computation of income
Income tax is levied on the total income of an individual. Thus, the first step is to compute the total income. The total income of an assessee is computed in the following steps:
Calculate income under 5 heads
In Income-tax Act, the income is computed in the following 5 heads of income:
a. Salary
b. House Property
c. Profits and gains from business or profession
d. Capital Gain
e. Income from Other Sources.
Clubbing of income of any other person
An individual is generally taxed in respect of his own income, but in respect of certain income, the Income-tax Act clubs the income of other persons in an individual’s income. Hence, an individual has to add another person’s income to his own income if clubbing provisions apply in his case.
Set off and carry forward of losses
Where an individual has incurred losses under any head of income, then he is allowed to make the following adjustments subject to relevant provisions relating to set-off and carry forward of losses:
a. Intra-head adjustment to set-off of losses from one source of income against income from another source taxable under the same head of income.
b. Inter-head adjustment to set-off of losses from one head of income against income taxable under another head of income.
If losses cannot be set off in the same year due to inadequacy of eligible profits, then certain losses are carried forward to the next assessment year.
Allowability of deductions under Chapter VI-A
The aggregate of income so computed as per aforesaid steps is called ‘Gross Total Income (GTI)’, out of which various deductions are allowed to a taxpayer on account of investments and savings made by him.
Determining total income
The balance income after allowing the deductions is called ‘Total Income’. The total income is bifurcated into 2 parts – Normal Income and Special Income. The normal income of a taxpayer is charged to tax as per applicable tax rates, and special income is charged to tax at special rates.
Computation of tax
To calculate an individual’s tax liability, income shall be first apportioned into normal income and special income. The bifurcation is done as normal income is taxable at applicable slab rates. However, where an individual opts for New Tax Regime as provided under Section 115BAC, the tax on normal income shall be charged at the rates provided under the said section. Whereas special income is taxed at special rates as prescribed under the Act.
An individual is liable to pay tax on normal income only if it exceeds the maximum exemption limit.
Applicability of AMT
Every assessee (other than a company) is subject to Alternative Minimum Tax (‘AMT’) if he has claimed any of the following deductions:
a. Deduction under any provision (other than Section 80P) included in Chapter VI-A under the heading ‘C- Deduction in respect of certain income’; or
b. Deduction under Section 10AA; or
c. Deduction under Section 35AD.
The alternative minimum tax is payable by the individual if the adjusted total income exceeds Rs. 20 lakhs and the tax payable by him on his total income (computed as per normal provisions of the Act) is less than 18.5% (or 9% in case of a unit in IFSC) of ‘adjusted total income’.
Computation of tax liability on total income
Amount
AMT liability
Tax payable on deemed total income computed as per AMT
| Particulars | Amount (₹) |
|---|---|
| Tax payable on deemed total income computed as per AMT provisions | xxx |
| Add: Surcharge | xxx |
| AMT after surcharge | xxx |
| Add: Health and Education Cess | xxx |
| Total tax payable as per AMT provisions (A) | xxx |
Normal tax liability
| Particulars | Amount (₹) |
| Tax on income at normal rates | xxx |
| Tax on income at special rates | xxx |
| Tax on Total Income | xxx |
| Less: Rebate under Section 87A | (xxx) |
| Tax payable after rebate | xxx |
| Add: Surcharge | xxx |
| Tax payable after surcharge | xxx |
| Add: Health and Education Cess | xxx |
| Total tax payable as per normal provisions (B) | xxx |
| Gross tax payable [Higher of AMT liability (A) or Normal tax liability (B)] | xxx |
| Less: Tax-deferred on perquisite value of ESOPs issued by eligible start-ups | (xxx) |
| Gross tax payable (after excluding ESOP deferred tax) | xxx |
| Less: | |
| – AMT Credit | (xxx) |
| – Relief under Section 89 | (xxx) |
| – Foreign tax credit under Section 90/90A/91 | (xxx) |
| Net tax liability | xxx |
| Add: | |
| – Interest under Section 234A, 234B, 234C | xxx |
| – Fees for late filing under Section 234F | xxx |
| Final Tax Payable | xxx |
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Aggregate Tax Liability Statement
| Particulars | Amount (₹) |
| Aggregate tax liability | xxx |
| Less: Taxes Paid | |
| – TDS deducted | (xxx) |
| – TCS collected | (xxx) |
| – Advance tax paid | (xxx) |
| – Self-Assessment Tax | (xxx) |
| Total tax payable / (refundable) | xxx |
Tax Rates for Individual
Normal Tax Rates (Old tax regime)
The normal tax rates are prescribed every year under the First Schedule of the Finance Act. The tax rates in the case of an individual have been enumerated in the below table:
| Net Income Range | Resident Super Senior Citizen | Resident Senior Citizen | Any Other Individual |
| Up to ₹2,50,000 | Nil | Nil | Nil |
| ₹2,50,001 – ₹3,00,000 | Nil | Nil | 5% |
| ₹3,00,001 – ₹5,00,000 | Nil | 5% | 5% |
| ₹5,00,001 – ₹10,00,000 | 20% | 20% | 20% |
| Above ₹10,00,000 | 30% | 30% | 30% |
‘Super senior citizen’ means an individual whose age is 80 years or more at any time during the relevant previous year.
‘Senior citizen’ means an individual whose age is 60 years or more at any time during the relevant previous year but less than 80 years on the last day of the previous year.
Normal Tax Rates (New tax regime)
Section 115BAC provides a new tax regime for individuals, which has reduced tax slabs. However, to avail of the benefit of this tax regime, the assessee has to forgo specified exemptions and deductions.
If an eligible assessee opts for this regime, the income shall be taxable at the following rate:
- For assessment year 2025-26
| Total Income (₹) | Rate |
|---|---|
| Up to ₹3,00,000 | Nil |
| ₹3,00,001 – ₹7,00,000 | 5% |
| ₹7,00,001 – ₹10,00,000 | 10% |
| ₹10,00,001 – ₹12,00,000 | 15% |
| ₹12,00,001 – ₹15,00,000 | 20% |
| Above ₹15,00,000 | 30% |
For the assessment year 2026-27
| Total Income (₹) | Tax Rate |
|---|---|
| Up to 4,00,000 | Nil |
| 4,00,001 – 8,00,000 | 5% |
| 8,00,001 – 12,00,000 | 10% |
| 12,00,001 – 16,00,000 | 15% |
| 16,00,001 – 20,00,000 | 20% |
| 20,00,001 – 24,00,000 | 25% |
| Above 24,00,000 | 30% |
The assessee opting for payment of taxes under Section 115BAC is required to satisfy the following conditions:
(a) Total income of the assessee has to be computed without claiming the following specified exemptions and deductions;
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- 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)];
- Exemption for income of minor [Section 10(32)];
- Deduction for units established in Special Economic Zones (SEZ) [Section 10AA];
- Entertainment Allowance [Section 16(ii)];
- Professional Tax [Section 16(iii)];
- Interest on housing loan (In case of property referred under section 23(2) i.e. self-occupied house property) [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];
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- 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 a 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]; and
- Deduction under Sections 80C to 80U other than specified under Section 80JJAA, Section 80CCD(2), Section 80CCH(2), and Section 80LA(1A) [Chapter VI-A].
- Total income of the assessee has to be computed without set-off of losses or depreciation carried forward from earlier years if such loss or depreciation is attributable to any of the specified exemptions and deductions;
- Total income of the assessee has to be computed without set-off of any loss under the head “Income from house property” with any other head of income;
- Total income of the assessee has to be calculated after claiming depreciation in the prescribed manner; and
- Total income of the assessee has to be computed without claiming any exemptions or deductions for allowances or perquisites provided under any other law for the time being in force.
Special Tax Rates
Income-tax Act prescribes the following special tax rates in respect of certain income:
| Section | Assessee | Particulars | Tax Rate |
|---|---|---|---|
| Section 111A | Any Person | Short-term capital gains arising from the transfer of equity shares or units of an equity-oriented mutual fund or units of a business trust, where such transfer is chargeable to Securities Transaction Tax (STT) | 15% (if transferred before 23-07-2024) / 20% (if transferred on or after 23-07-2024) |
| Section 112 | Any person | Long-term capital gains arising from the transfer of listed securities (other than a unit) or zero-coupon bonds without giving effect to the benefit of indexation | 10% (if the asset is transferred before 23-07-2024) or 12.5% (if the asset is transferred on or after 23-07-2024) |
| Section 112 | Non-resident | Long-term capital gains arising from the transfer of unlisted shares or shares of closely held companies without giving effect to the benefit of indexation and currency translation | 10% (if the asset is transferred before 23-07-2024) or 12.5% (if the asset is transferred on or after 23-07-2024) |
| Section 112 | Any Person | Any other long-term capital gains | 20% (if the asset is transferred before 23-07-2024) or 12.5% (if the asset is transferred on or after 23-07-2024) |
| Section 112A | Any Person | Long-term capital gains, in excess of Rs. 1.25 lakhs, arising from the transfer of equity shares, units of an equity-oriented mutual fund, or units of business trust if the transfer of such capital asset is chargeable to Securities Transaction Tax (STT) | 10% (if the asset is transferred before 23-07-2024) or 12.5% (if the asset is transferred on or after 23-07-2024) |
| Section 115A | Non-resident | Interest received from Government or an Indian concern on monies borrowed or debt incurred by such Government or the Indian concern in foreign currency | 20% |
| Section 115A | Non-resident | Interest received from notified Infrastructure Debt Fund as referred to in Section 10(47) | 5% |
| Section 115A | Non-resident | Interest received from an Indian Co. or business trust as specified in Section 194LC, i.e., interest in respect of monies borrowed by them in foreign currency or long-term infrastructure bonds or rupee-denominated bonds | Interest payable in respect of long-term bond or rupee-denominated bonds listed on a recognised stock exchange in IFSC – 4% if bonds are issued before 01-07-2023 and 9% if bonds are issued on or after 01-07-2023; In any other case – 5% |
| Section 115A | Non-resident | Interest on rupee-denominated bonds of an Indian Co. or Government Securities or municipal debt securities as referred to in Section 194LD | 5% |
| Section 115A | Non-resident | Interest income distributed by business trust to its unit holders as referred to in Section 194LBA | 5% |
| Section 115A | Non-resident | Dividend income | 10% if the dividend is received from a unit in an IFSC otherwise 20% |
| Section 115A | Non-resident | Income received in respect of units of specified Mutual Funds or of UTI purchased in foreign currency | 20% |
| Section 115A | Non-resident | Income by way of royalty or fees for technical services received from Indian concern or Government in pursuance of an approved agreement made after 31-3-1976. However, the benefit shall not be available if royalty or fees for technical services is connected with the assessee’s Permanent Establishment (PE) in India | 20% |
| Section 115AC | Non-resident | Long-term capital gains arising from the transfer of Bonds or GDRs of an Indian Company or Public sector company (PSU) purchased in foreign currency | 10% (if the asset is transferred before 23-07-2024) or 12.5% (if the asset is transferred on or after 23-07-2024) |
| Section 115AC | Non-resident | Interest on bonds of an Indian Company or Public Sector Company (PSU) purchased in foreign currency | 10% |
| Section 115AC | Non-resident | Dividend on GDRs of an Indian Company or Public Sector Company (PSU) purchased in foreign currency | 10% |
| Section 115ACA | Resident Individual | Long-term capital gains arising from the transfer of GDRs issued by an Indian company, engaged in specified knowledge-based industry or service, to its employees if such GDRs are purchased in foreign currency and capital gain is computed without taking benefit of foreign exchange fluctuation and indexation | 10% (if the asset is transferred before 23-07-2024) or 12.5% (if the asset is transferred on or after 23-07-2024) |
| Section 115ACA | Resident Individual | Dividend on GDRSs issued by an Indian company, engaged in a specified knowledge-based industry or service, to its employees if such GDRs are purchased in foreign currency | 10% |
Non-resident Indian Income from specified asset purchased in foreign currency 20% Rebate under Section 87A
- In the case of a resident individual, a rebate of up to Rs. 12,500 is allowed under Section 87A from the amount of tax if the total income of such individual does not exceed Rs. 500,000.
- A maximum rebate of Rs. 25,000 is allowed under section 87A from the amount of income tax on total income, which is chargeable to tax under section 115BAC(1A) . However, this rebate is allowed if the total income of assessee chargeable to tax under section 115BAC(1A) is up to Rs. 7,00,000. [Applicable for AY 2025-26]
- A maximum rebate of Rs. 60,000 is allowed under Section 87A from the amount of income tax on total income, which is chargeable to tax under section 115BAC(1A). However, this rebate is allowed if the total income of assessee chargeable to tax under section 115BAC(1A) is up to Rs. 7,00,000. [Applicable from AY 2026-27]
Further, if the total income chargeable to tax under section 115BAC(1A) exceeds Rs. 7,00,000/12,00,000 and the tax payable on such income exceeds the difference between the total income and Rs. 7,00,000/12,00,000 he can claim a rebate with marginal relief to the extent of the difference between the tax payable on such total income and the amount by which it exceeds Rs. 7,00,000/12,00,000.
Rate of Surcharge
In respect of an individual, the rate of surcharge shall be as under:
| Nature of Income | Up to Rs. 50 lakhs | More than Rs. 50 lakhs but up to Rs. 1 crore | More than Rs. 1 crore but up to Rs. 2 crores | More than Rs. 2 crores but up to Rs. 5 crores | More than Rs. 5 crores |
| Short-term capital gain covered under Section 111A or Section 115AD | Nil | 10% | 15% | 15% | 15% |
| Long-term capital gain covered under Section 112A or Section 115AD or Section 112 | Nil | 10% | 15% | 15% | 15% |
| Dividend income (not being dividend income chargeable to tax at a special rate under sections 115A, 115AB, 115AC, 115ACA) | Nil | 10% | 15% | 15% | 15% |
| Unexplained income chargeable to tax under Section 115BBE | 25% | 25% | 25% | 25% | 25% |
| Any other income (if opted for the old tax regime) | Nil | 10% | 15% | 25% | 37% |
| Any other income (if opted for the new tax regime of Section 115BAC) | Nil | 10% | 15% | 25% |
Every person is liable to pay health and education cess at the rate of 4% on the amount of income tax plus surcharge.
