Article discusses Important Amendments applicable for AY 2020-21 (PY 2019-20) which includes Changes in Rebate under section 87A, Increase in Standard Deduction for Salaried employees, Increase in Tax Audit Limit, Amendment in Section 54 Provisions, Amendment in provisions related to deduction under section 80EEA and section 80EEB, Decrease in MAT rate, New Tax Rates for Corporate Assessees, Changes in TDS, Change in provisions related to Compulsory Income Tax Return filing and changes in Income tax rates.

Some Important Amendments applicable for AY 2020-21 (PY 2019-20) are noted below:

Sl No Head Section Particulars
1 Rebate 87A Limit of Reabate u/s 87A increased to Rs. 12,500/- from Rs. 2,500/-

To avail Rebate U/s. 87A the Net Total Income < Rs.5,00,000/-, then the rebate will be Rs.12,500/- or the tax amount which-ever is Lower.

2 Salary 16(ia) Standard Deduction increased to Rs.50,000/- from Rs.40,000/-
3 House Property 23(4)
  • Now 2 self-occupied Properties are exempt from tax, owners need not to pay tax on Notional Rent.
  • Maximum Deduction under Interest for Self Occupied Property
  • House 1- Maximum Deduction Allowed Rs. 1,50,000/-
  • House 2- Maximum Deduction Allowed Rs. 1,50,000/-
  • But Maximum Deduction is Rs. 2,00,000/-
4 Tax Audit 44AB Relaxation from Tax Audit upto Rs. 5 Crore, if the following Conditions satisfied

  • Aggregate of all receipts in cash during the PY < 5% of such receipts; and
  • Aggregate of all payments made in cash during the PY < 5% of such payments.
5 Capital Gain 54 An assessee can purchase/construct 2 residential houses (earlier one) if the Long Term Capital Gain < Rs. 2cr.

The Asseessee can avail this option only once in life time.

6 Deduction 80EEA Deduction for interest payable on loan taken by Individual from any financial institution for purchase of residential house property shall be allowed up to Rs. 1,50,000/- subject to following conditions:-

a) loan must be sanctioned during the PY 2019-20.

b) Stamp duty value of the House < Rs.45,00,000.

c) Assessee should not own any residential house property on the date of sanction of loan.

Deduction u/s 80EEA is allowable from AY 20-21 onwards till the repayment of loan continues.

7 Deduction 80EEB Additional Deduction shall be allowed to Individual on interest up to Rs. 1,50,000/- payable on loan taken from financial institution for the purchase of electrical vehicle between the period 01.04.2019 to 31.03.2023.
8 Corporate Taxation 115BAA & 115BAB The Domestic Companies may opt for

  • The corporate tax rates of 22% for existing domestic companies (Sec 115BAA) and
  • 15% for new domestic manufacturing companies. (Sec 115BAB)
  • Company cannot carry forward and set off their unutilized MAT credit.
  • Deductions/Exemptions not available to Companies opts for 115BAA or 115BAB.
9 MAT 115JB MAT rate reduced to 15% from 18.5%.
10 Return Filing 139(1) Mandatory of return filing for the following cases:

  • Where expenditure on foreign travelling > Rs. 2 Lakhs.
  • Where electricity bills > Rs. 1 Lakh.
  • Where amounts deposited in current account with Bank/Co-operative Bank > Rs. 1 Crore.
  • where exemption u/s 54, 54B, 54D, 54EC, 54F, 54G, 54GA and 54GB is claimed (Sixth Proviso).
11 TDS 194A
  • Limit for TDS by Banks, Post Office and Cooperative Society Bank on interest payment has been increased to Rs.40,000/- from Rs.10,000/-.
  • In case of Senior Citizen the limit now is Rs.50,000/-
12 TDS 194DA If receipts from LIC > Rs. 1,00,000, then TDS to be done on the amount [other than amount exempt under section 10(10D)] @ 5% as against 1% previously.
13 TDS 194I Limit for TDS on Rent has increased to Rs. 2,40,000 as against Rs. 1,80,000 previously.
14 TDS 194M Individual / HUF (other than who are required to deduct TDS u/s 194C/194H/194J) shall have to deduct TDS @ 5% if payment > Rs. 50 lakhs paid as commission or brokerage or professional services to any resident. (w.e.f.  1.09.2019)
15 TDS 194N
  • Banking company/Co-operative Society/Post Office shall deduct TDS @ 2% on amount exceeding Rs. 1 crore paid in cash to any person;
  • Where recipient has not filed Returns for last three years, deduction shall be @ 2 % where cash withdrawn > Rs. 20 lakhs but < Rs. 1 crore and @ 5 % where cash withdrawn > Rs.1 Crore. (w.e.f. 01.07.2020).

Note: All TDS & TCS rates has been reduced by 25% for FY 2020-21 (i.e. TDS u/s 194J would be 7.5% instead of 10%). This cut rate will be applicable for the period from 14-05-2020 to 31-03-2021.

A) Income Tax Slab Rate for AY 2020-21 for Individuals/HUF:

Income tax slabs

Taxable income Tax Rate
Up to Rs. 2,50,000 Nil
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%

From the AY 2020-21 rebate u/s 87A (only for Individual) is available only if the Net Total Income < Rs. 5,00,000/-. The quantum of maximum rebate will be Rs.12500/-.

B) Surcharge:

Nature of Income Range of Total Income
Up to Rs. 50 lakh More than Rs. 50 lakh but up to Rs. 1 crore More than Rs. 1 crore but up to Rs. 2 crore More than Rs. 2 crore but up to Rs. 5 crore More than Rs. 5 crore
Short-term capital gain covered under Section 111A Nil 10% 15% 15% 15%
Long-term capital gain covered under Section 112A Nil 10% 15% 15% 15%
Any other income* Nil 10% 15% 25% 37%

Surcharge is levied on the amount of income-tax at following rates if the total income of an individual, HUF, Artificial judicial person assessee exceeds specified limits

C) Tax Slab Rate for Domestic Company:

A domestic company is taxable at 30%. However, tax rate is 25% if turnover or gross receipt of the company does not exceed Rs. 50 crore.

Plus:

Applicable surcharge: 

7% of tax where total income exceeds Rs. 1 crore

12% of tax where total income exceeds Rs. 10 crore

Applicable Education cess

4% of tax plus surcharge

D)  Tax Rates for Foreign Company:

A foreign company is taxable at 40%

Plus:

Applicable surcharge: 

2% of tax where total income exceeds Rs. 1 crore

5% of tax where total income exceeds Rs. 10 crore

Applicable Education cess:

 4% of tax plus surcharge

E. Income Tax Slab for Co-operative Society:

Taxable income Tax Rate
Up to Rs. 10,000 10%
Rs. 10,000 to Rs. 20,000 20%
Above Rs. 20,000 30%

Plus:

Surcharge: 12% of tax where total income exceeds Rs. 1 crore

Education cess: 4% of tax plus surcharge+

F) Income Tax Slab for Partnership Firm

Income Tax Rate –      30%

Surcharge: 12% of tax where net income exceeds Rs. 1 crore. (Subject to Marginal Relief)

Education Cess: 4% of tax plus surcharge.

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Note: The Author has been taken utmost care for writing the Article, if there are any ERROR/OMISSION please contact me on my Email id pppriyanka75@gmail.com so that it will help me to rectify it. Any productive suggestions are welcome.

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7 Comments

  1. Pratap Singh surana says:

    Excellent and informative article…….please send me this article by e-mail and in future also
    With regards
    PRATAP SINGH SURANA
    F.C.A…..KOLKATA

  2. FCA Avijit Kumar Sen says:

    Excellent Expression and helpful guidance for Tax payers. Send me a copy of entire matter. With best wishes for you .
    Mobile : 09830468036

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