Article contains analysis of Union Budget 2019 provisions for Income Tax Rates for Financial Year 2019-20, Standard deduction from Salary Income [AY 20-21 Onwards], House Property Income [AY 2020-21 Onwards], Capital Gains Income, TDS and Tax Deduction
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Income Tax Rates for Financial Year 2019-20
Foreign Company: [AY20-21]
No change in Corporate tax rates. Effective tax rates shall be as under.
| Particulars | Taxable Income upto 1Cr. | Above 1cr but upto 10Cr | Above 10cr |
| Corporate Tax | 40% | 40% | 40% |
| Surcharge | – | 2% | 5% |
| Sub-Total | 40% | 40.80% | 42% |
| Health and Education Cess | 4% | 4% | 4% |
| Effective Tax Rate | 41.60% | 42.43% | 43.68% |
Domestic Company: [AY20-21]
Corporate tax rate to continue at 25% for domestic companies [Micro, Small and Medium Enterprises] having total turnover/ gross receipts not exceeding INR 250 Crores in the FY 2017-18. In other cases, the tax rates remain unchanged at 30%. Effective tax rates are as under.
For a domestic company having total turnover/ gross receipts not exceeding INR 250 Crores in the FY 2017-18:
| Particulars | TI upto 1Cr. | > 1cr but upto 10Cr | Above 10cr |
| Corporate Tax | 25% | 25% | 25% |
| Surcharge | – | 7% | 12% |
| Sub-Total | 25% | 26.75% | 28% |
| Health and Education Cess | 4% | 4% | 4% |
| Effective Tax Rate | 26% | 27.82% | 29.12% |
For Other than above:
| Particulars | TI upto 1Cr. | > 1cr but upto 10Cr | Above 10cr |
| Corporate Tax | 30% | 30% | 30% |
| Surcharge | – | 7% | 12% |
| Sub-Total | 30% | 32.10% | 33.60% |
| Health and Education Cess | 4% | 4% | 4% |
| Effective Tax Rate | 31.20% | 33.38% | 34.94% |
Partnership and LLP:
Tax rates remain unchanged. Effective tax rate of 31.2% if taxable income is less than INR 1 Crore and 34.94% if taxable income exceeds INR 10 Crore.
Individuals/ HUF/ BOI/AOP:
Tax rates remain unchanged. Slabs are as under:
| Assessee Type | Income Tax Slabs for AY 2020-21 | |
| Total Income | Rate of Tax | |
| All Individuals [Except stated below], HUF, AOP and BOI | Upto Rs.2,50,000 | Nil |
| Rs.2,50,001 to Rs.5,00,000 | 5% | |
| Rs.5,00,001 to Rs.10,00,000 | 20% | |
| Above Rs.10,00,000 | 30% | |
| Resident Individual being age 60 Years above but upto 80 Years | Upto Rs.3,00,000 | Nil |
| Rs.3,00,001 to Rs.5,00,000 | 5% | |
| Rs.5,00,001 to Rs.10,00,000 | 20% | |
| Above Rs.10,00,000 | 30% | |
| Resident Individual being age 80 Years and above | Upto Rs.5,00,000 | Nil |
| Rs.5,00,001 to Rs.10,00,000 | 20% | |
| Above Rs.10,00,000 | 30% | |
In case of Resident Individuals with Total Income between Rs. 50 Lakhs up to Rs. 1.00 Crore, Surcharge at the rate of 10% on the taxes payable will be applicable. In case Total Income exceeds Rs.1.00 Crore, Surcharge will be leviable at the rate of 15%.
Co-operative Societies:
| Total Income | Rate of Tax |
| Upto Rs.10,000 | 10% |
| Rs.10,001 to Rs.20,000 | 20% |
| Rs.20,001 and above | 30% |
In case Total Income exceeds Rs.1.00 Crore, Surcharge will be leviable at the rate of 12%.
Standard deduction from Salary Income [AY20-21 Onwards]
Standard deduction of Rs.40,000/- under the head ‘Salary’ as introduced from AY19-20 is now proposed to increase to Rs.50,000/-
House Property Income [AY 2020-21 Onwards]
1. All these years, assessee had option of treating only one property as self-occupied even though he was self- occupying more than one. By this he we suppose to pay tax on other self-occupied properties treating as deemed let out on the basis of notional calculations.
Now, govt has proposed to allow two properties at the options of assessee to treat as self-occupied properties and pay tax on balance self-occupied properties as deemed let out.
Also, interest on home loans deduction shall not exceed Rs.2 Lakhs on both the self-occupied properties taking together.
2. Presently, there is no tax, if the assessee is in possession of any building or land appurtenant thereto held as stock-in-trade and not let during the whole or any part of the year for the period of 1 year from the end of the financial year in which the completion certificate of construction is obtained from competent authority.
Now, govt has proposed to give time of 2 years instead of 1 year. This additional 1 year will give more time to builders to sell their flats at earliest.
Capital Gains Income [AY 2020-21 Onwards]
Presently, there is no tax, if the assessee to whom capital gain is accrued on account of sale of residential house (long term asset) reinvests such capital gain in a new residential house. This reinvest was restricted to only one new residential house in India.
Now, govt has proposed to allow deduction if assessee has reinvested in 2 residential houses (Construct/Purchase) and claim deduction u/s 54 of the act for both the houses. This is optional and not mandatory. However, this option can be exercised only once in life time of the assessee and the capital gain in such case should not exceed Rs.2 Crores.
TDS [AY20-21 Onwards]
1. Section 194A provides threshold limit of Rs.10,000/- in a year for TDS deduction in case of interest payment by Bank/Post Offices.
Now, this limit is proposed to be raised to Rs.40,000/-
2. Section 194-I provides threshold limit of Rs.1,80,000/- in a year for TDS deduction in case of rent payment by the assessee,
Now, this limit is proposed to be raised to Rs.2,40,000/-
Deductions [AY20-21 Onwards]
1. Benefit of Section 80-IBA deduction to assessee involved in housing projects as defined therein is extended for 1 more year.
2. Presently, section 87A allows rebate of Rs.2500/- from Tax Payable in case the assessee being resident individual has total income not exceeding Rs.3,50,000/-
Now, govt has proposed to allow rebate of Rs.12,500/- from tax payable if total income doesn’t exceed Rs.5,00,000/-
Example:
| Particular | Case (1) | Case (2) | Remarks |
| Gross Total Income | 6,50,000 | 7,50,000 | |
| Chapter VIA Deductions | 1,50,000 | 1,50,000 | |
| Total Income | 5,00,000 | 6,00,000 | |
| Sec.87A rebate applicable? | Yes | No | Sec.87A rebate not applicable in case since Total Income exceeded Rs.5 L. |
| Tax Payable | Rs.12,500/-
Rs.0 (Below 2.50L) Rs.12,500 (5% on 2.50L to 5L) |
Rs.32,500/-
Rs.0 (Below 2.50L) Rs.12,500 (5% on 2.50L to 5L) Rs.20,000 (20% on 5L to 6L) |
|
| Rebate u/s 87A | Rs.12,500/- | NIL | |
| Balance Tax Payable | NIL | Rs.32,500/- |
Source: Finance Bill, 2019.
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