Income Tax Rates for AY 2020-21 (FY 2019-20)

In this Article we update you about the Income tax slab rates applicable to different types of taxpayers such as Individual, HUF, Partnership Firms, AOP/BOI, Co-operative Society, Local authorities, Domestic as well as Foreign Companies, etc for assessment year 2020-21 i.e. financial year 2019-20. Articles compiles Income Tax Rate Chart for Financial Year 2019-20 after considering the changes by Union Budget 2020 in relation to Tax Rate applicable to Companies.

Income Tax Rate for AY 2020-21 (FY 2019-20) are as under:

1. In case of an Individual (resident or non-resident) or HUF or Association of Person or Body of Individual or any other artificial juridical person

Surcharge: 10% of income tax, where total income exceeds INR 50 lakh up to INR 1 crore. 15% of income tax, where the total income exceeds INR 1 crore up to INR 2 crore. 25% of income tax, where total income exceeds Rs 2 crore upto Rs 5 crore and 37% of income tax, where total income exceeds Rs 5 crore. (Refer Note 1)

Health and Education Cess: 4% of Income Tax plus Surcharge. (Refer Note 2)

Please note that this exemption limit will be applicable for non-resident individual also Irrespective of their age.

2. In case of a resident senior citizen (who is 60 years or more at any time during the previous year but less than 80 years on the last day of the previous year)

Surcharge: 10% of income tax, where total income exceeds INR 50 lakh up to INR 1 crore. 15% of income tax, where the total income exceeds INR 1 crore up to INR 2 crore. 25% of income tax, where total income exceeds Rs 2 crore upto Rs 5 crore and 37% of income tax, where total income exceeds Rs 5 crore. (Refer Note 1)

Health and Education Cess: 4% of Income Tax plus Surcharge. (Refer Note 2)

3. In case of a resident super senior citizen (who is 80 years or more at any time during the previous year)

Surcharge: 10% of income tax, where total income exceeds INR 50 lakh up to INR 1 crore. 15% of income tax, where the total income exceeds INR 1 crore up to INR 2 crore. 25% of income tax, where total income exceeds Rs 2 crore upto Rs 5 crore and 37% of income tax, where total income exceeds Rs 5 crore. (Refer Note 1)

Health and Education Cess: 4% of Income Tax plus Surcharge (Refer Note 2)

Note 1: Marginal Relief

The surcharge shall be subject to marginal relief:

1. Where income exceeds Rs. 50 lakhs, the total amount payable as income-tax and surcharge shall not exceed total amount payable as income-tax on total income of Rs. 50 lakhs by more than the amount of income that exceeds Rs. 50 lakhs.
2. Where income exceeds Rs. 1 crore, the total amount payable as income-tax and surcharge shall not exceed 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
3. Where income exceeds Rs. 2 crore, the total amount payable as income-tax and surcharge shall not exceed 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
4. Where income exceeds Rs. 5 crore rupees, the total amount payable as income-tax and surcharge shall not exceed total amount payable as income-tax on total income of Rs. 5 crore rupees by more than the amount of income that exceeds Rs. 5 crore rupees

Note 2: Rebate U/s. 87A

Assessee being a resident individual in India, whose total income after claiming deduction under chapter VI A does not exceed Rs. 5,00,000 shall be entitled to the rebate under section 87A of an amount equal to hundred per cent of such income-tax or an amount of Rs. 12,500, whichever is less. further, please note that this rebate is applied to the total tax before adding the Education Cess (4%).

4. Income Tax Rate for AY 2020-21 for Partnership Firm / LLP

Income Tax Rate: 30%

Surcharge: 12% of taxable income if net income exceed 1 crore. However, the surcharge shall be subject to marginal relief (where income exceeds one crore rupees, the total amount payable as income-tax and surcharge shall not exceed total amount payable as income-tax on total income of one crore rupees by more than the amount of income that exceeds one crore rupees).

Health and Education Cess: 4% of Income Tax Plus Surcharge

5. Income Tax Rate for AY 2020-21 for Local Authority

Income Tax Rate: 30%

Surcharge: 12% of taxable income if net income exceed 1 crore. However, the surcharge shall be subject to marginal relief (where income exceeds one crore rupees, the total amount payable as income-tax and surcharge shall not exceed total amount payable as income-tax on total income of one crore rupees by more than the amount of income that exceeds one crore rupees).

Health and Education Cess: 4% of Income Tax Plus Surcharge

6. Income Tax Rate for AY 2020-21 for Co-operative Society

Surcharge: 12% of taxable income if net income exceed 1 crore. However, the surcharge shall be subject to marginal relief (where income exceeds one crore rupees, the total amount payable as income-tax and surcharge shall not exceed total amount payable as income-tax on total income of one crore rupees by more than the amount of income that exceeds one crore rupees).

Health and Education Cess: 4% of Income Tax Plus Surcharge

7. Income Tax Rate for AY 2020-21 for Domestic Company

Surcharge: 7% of taxable income if net income exceed 1 crore but does not exceed 10 crore and 12% of taxable income if net income exceed 10 crore.

The surcharge shall be subject to marginal relief, which shall be as under:

i) Where income exceeds Rs. 1 crore but not exceeding Rs. 10 crore, the total amount payable as income-tax and surcharge shall not exceed 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.

ii) Where income exceeds Rs. 10 crore, the total amount payable as income-tax and surcharge shall not exceed total amount payable as income-tax on total income of Rs. 10 crore by more than the amount of income that exceeds Rs. 10 crore

Health and Education Cess: 4% of Income Tax Plus Surcharge

Note:

1. Detail explanation of Section 115BAA:

A. Following conditions need to be satisfied for getting benefit of lower tax rate introduced by Section 115BAA:

a. without claiming exemption/ deduction

• u/s 10AA [SEZ units],
• u/s 32(1)(iia) [additional depreciation qua new plant and machinery @ 20%/ 30%],
• u/s 32AD [15% on new assets in undertaking set up in specified backward areas in Andhra Pradesh, Bihar, Telangana, and West Bengal]
• u/s 33AB [specified percentage of amounts deposited with Tea/ Coffee/ Rubber Board]
• u/s 33ABA [specified percentage of amounts deposited in Site Restoration Account]
• u/s 35(1)(ii)/(iia), 35(2AA) or 35(2AB) [specified deduction for scientific research]
• u/s 35AD [expenditure on specified business]
• u/s 35CCC [expenditure on agricultural extension project]
• u/s 35CCD [expenditure on skill development project]
• under Part C of Chapter VIA except section 80JJAA or 80LA or 80M of the Act (such as 80IA/IB/IC/ID/IE etc.)

b. Without set-off of any brought forward losses to the extent such loss relates to deductions mentioned above. Such losses would also not be allowed to be carried forward to subsequent years.

c. After claiming depreciation other than additional depreciation u/s 32(1)(iia).

Benefit of lower rate under the aforesaid section can be exercised by the company from any year commencing from AY 2020-21 or onwards. Such option is to be exercised in prescribed manner, before due date of return u/s 139(1) for the year in which option is exercised. Option once exercised would be binding for subsequent years and cannot be withdrawn.

B. Companies availing benefit of lower tax rate under new provisions of sections 115BAA have been Exempted from MAT on book profit under section 115JB

2. Detail explanation of Section 115BAB:

A. Following conditions need to be satisfied for getting benefit of lower tax rate introduced by Section 115BAB:

a) If such company is set-up and registered, on or after 1st October,2019 and commences manufacturing activity upto 31st March, 2023.

b) The company is not engaged in any business other than the business of manufacture or production of any article or thing and research in relation to, or distribution of, such article or thing manufactured or produced by it. The following businesses would not be considered as a business of manufacture or production of any article or thing:

• • Development of computer software in any form or in any media;
  • Mining;
  • Conversion of marble blocks or similar items into slabs;
  • Bottling of gas into cylinder;
  • Printing of books or production of cinematograph film; or
  • Any other business as may be notified by the Central Government on this behalf.

The business of generation of electricity shall be regarded as business of manufacture or production of any article or thing for this purpose.

c) without claiming exemption/ deduction

• • u/s 10AA [SEZ units],
  • u/s 32(1)(iia) [additional depreciation qua new plant and machinery @ 20%/ 30%],
  • u/s 32AD [15% on new assets in undertaking set up in specified backward areas in Andhra Pradesh, Bihar, Telangana, and West Bengal]
  • u/s 33AB [specified percentage of amounts deposited with Tea/ Coffee/ Rubber Board]
  • u/s 33ABA [specified percentage of amounts deposited in Site Restoration Account]
  • u/s 35(1)(ii)/(iia), 35(2AA) or 35(2AB) [specified deduction for scientific research]
  • u/s 35AD [expenditure on specified business]
  • u/s 35CCC [expenditure on agricultural extension project]
  • u/s 35CCD [expenditure on skill development project]
  • under Part C of Chapter VIA except section 80JJAA or 80M of the Act (such as 80IA/IB/IC/ID/IE etc.)

d) Without set-off of any brought forward losses to the extent such loss relates to deductions mentioned above. Such losses would also not be allowed to be carried forward to subsequent years.

e) After claiming depreciation other than additional depreciation u/s 32(1)(iia).

f) Additionally, following conditions must be fulfilled by the company to avail benefit of lower tax rate:

• • company must not be formed by splitting up, or the reconstruction of a business already in existence
  • company must not use machinery or plant previously used for any purpose. Used plant and machinery to the extent of 20% of total value of plant and machinery is permissible
  • company must not use building previously used as a hotel or a convention Centre.

B. Companies availing benefit of lower tax rate under new provisions of sections 115BAB have been Exempted from MAT on book profit under section 115JB

8. Income Tax Rate for AY 2020-21 for Foreign Company

Surcharge: 2% of taxable income if net income exceed 1 crore but does not exceed 10 crore and 5% of taxable income if net income exceed 10 crore. However, the surcharge shall be subject to marginal relief, which shall be as under:

(i) Where income exceeds one crore rupees but not exceeding ten crore rupees, the total amount payable as income-tax and surcharge shall not exceed total amount payable as income-tax on total income of one crore rupees by more than the amount of income that exceeds one crore rupees.

(ii) Where income exceeds ten crore rupees, the total amount payable as income-tax and surcharge shall not exceed total amount payable as income-tax on total income of ten crore rupees by more than the amount of income that exceeds ten crore rupees.

Health and Education Cess: 4% of Income Tax plus Surcharge.

(Article is been compiled by CA Sandeep Kanoi and CA Prapti Raut)