Rate of income tax – Surcharge and Tax rate for company

I. Rates of income-tax in respect of income liable to tax for the assessment year 2019-20

There is no change in this part. It is same as provided earlier.

In respect of income of all categories of assessees liable to tax for the assessment year 2019-20, the rates of income-tax have been specified in Part I of the First Schedule to the Bill. These are the same as those laid down in Part III of the First Schedule to the Finance Act, 2018 for the purposes of computation of “advance tax”, deduction of tax at source from “Salaries” and charging of tax payable in certain cases.

1) Surcharge on income-tax

The amount of income-tax shall be increased by a surcharge for the purposes of the Union,—

(a) in the case of every individual or Hindu undivided family or every association of persons or body of individuals, whether incorporated or not, or every artificial juridical person referred to in sub-clause (vii) of clause (31) of section 2 of the Act,—

(i) at the rate of 10%  of such tax, where the income or the aggregate of income paid or likely to be paid and subject to deduction exceeds fifty lakh rupees but does not exceed one crore rupees, and (i.e.10% if Income is Rs. 50 lakhs to Rs. 1 crore)

(ii) at the rate of 15%  of such tax, where the income or the aggregate of income paid or likely to be paid and subject to deduction exceeds one crore rupees; (i.e.15% if Income is more than Rs. 1 crore)

(iii) surcharge will also be levied at the appropriate rates in cases where these persons are liable to tax under section 115JC of the Act.

(b) in the case of cooperative societies, firms or local authorities having

    • Total income exceeding one crore rupees, surcharge will be levied at the rate of 12% of income-tax payable on total income.
    • Total income chargeable to tax under section 115JC of the Act, and such income exceeds one crore rupees, surcharge at the rate of 12% shall be levied.

(c ) in the case of a domestic company,—

(i) having total income exceeding one crore rupees but not exceeding ten crore rupees, the amount of income-tax computed shall be increased by a surcharge for the purposes of the Union calculated at the rate of 7% of such income tax; (i.e.7% if Income is Rs. 1 crore to Rs. 10 crore)

(ii) having total income exceeding ten crore rupees, the amount of income-tax computed shall be increased by a surcharge for the purposes of the Union calculated at the rate of 12% of such income-tax; and ; (i.e.12% if Income is more than Rs. 10 crore)

(iii) surcharge will also be levied at the appropriate rates in cases where the company is liable to tax under section 115JB of the Act.

(d) in the case of a company, other than a domestic company,—

(i) having total income exceeding one crore rupees but not exceeding ten crore rupees, the amount of income-tax computed shall be increased by a surcharge for the purposes of the Union calculated at the rate of 2% of such income tax; (i.e. 2% if Income is Rs. 1 crore to Rs. 10 crore)

(ii) having total income exceeding ten crore rupees, the amount of income-tax computed shall be increased by a surcharge for the purposes of the Union calculated at the rate of 5% of such income tax; and (i.e.5% if Income is more than Rs. 10 crore)

(iii) surcharge will also be levied at the appropriate rates in cases where the company is liable to tax under section 115JB of the Act.

(e) In other cases (including cases where provisions of sections 115-O, 115QA, 115R, 115TA or 115TD are applicable), the surcharge shall be levied at the rate 12%. Surcharge shall also be levied at the rate of 12% on additional Income-tax chargeable under newly inserted sub-section (2A) in existing section 92CE.

(2) Marginal Relief —

Marginal relief has also been provided in all cases where surcharge is proposed to be levied.

(3) Health and Education Cess

For assessment year 2019-20, “Education Cess on income-tax” and “Secondary and Higher Education Cess on income-tax” has been discontinued. However, a new cess, by the name of “Health and Education Cess” has been levied at the rate of 4% on the amount of income tax so computed, inclusive of surcharge, wherever applicable, in all cases. No marginal relief is available in respect of such cess.

II. Rates for deduction of income-tax at source during the financial year 2019-20 from certain incomes other than “Salaries”.

The rates for deduction of income-tax at source during the financial year 2019-20 on certain incomes other than “Salaries” have been specified in Part II of the First Schedule to the Bill. The rates for all the categories of persons will remain the same as those specified in Part II of the First Schedule to the Finance Act, 2018, for the purposes of deduction of income-tax at source during the financial year 2018-19. For sections specifying the rate of deduction of tax at source, the tax shall continue to be deducted as per the provisions of these sections. Two new sections 194M and 194N, specifying the rate of deduction in cases covered therein, are proposed to be inserted and the rate of deduction is proposed to be modified for existing section 194DA.

(1) Surcharge

The amount of tax so deducted, in the case of a non-resident person, shall be increased by a surcharge,—

(a) in case of an individual, Hindu undivided family, association of person, body of individual or artificial juridical person;

(i) at the rate of 10% of such tax, where the income or the aggregate of such incomes paid or likely to be paid and subject to the deduction exceeds fifty lakh rupees but does not exceed one crore rupees;

(ii) at the rate of 15% of such tax, where the income or the aggregate of such incomes paid or likely to be paid and subject to the deduction exceeds one crore rupees but does not exceeds two crore rupees;

(iii) at the rate of 25% of such tax, where the income or the aggregate of such incomes paid or likely to be paid and subject to the deduction exceeds two crore rupees but does not exceeds five crore rupees; and

(iv) at the rate of 37% of such tax, where the income or the aggregate of such incomes paid or likely to be paid and subject to the deduction exceeds five crore rupees.

(b) in case of a firm or cooperative society, at the rate 12% of such tax, where the income or the aggregate of such incomes paid or likely to be paid and subject to the deduction exceeds one crore rupees.

(c) The amount of tax so deducted, in the case of a company other than a domestic company, shall be increased by a surcharge,—

(i) at the rate of 2% of such tax, where the income or the aggregate of such incomes paid or likely to be paid and subject to the deduction exceeds one crore rupees but does not exceed ten crore rupees;

(ii) at the rate of 5% of such tax, where the income or the aggregate of such incomes paid or likely to be paid and subject to the deduction exceeds ten crore rupees.

(d) No surcharge will be levied on deductions in other cases.

 (2) Health and Education Cess

“Health and Education Cess” shall continue to be levied at the rate of four %of income-tax including surcharge wherever applicable, in the cases of persons not resident in India, including company other than a domestic company.

III. Rates for deduction of income-tax at source from “SALARIES”, computation of “ADVANCE TAX” and charging of income-tax in SPECIAL CASES during the financial year 2019-20.

The rates for deduction of income-tax at source from “Salaries” during the financial year 2019-20 and also for computation of “advance tax” payable during the said year in the case of all categories of assessees have been specified in Part III of the First Schedule to the Bill. These rates are also applicable for charging income-tax during the financial year 2019-20 on current incomes in cases where accelerated assessments have to be made, for instance, provisional assessment of shipping profits arising in India to non-residents, assessment of persons leaving India for good during the financial year, assessment of persons who are likely to transfer property to avoid tax, assessment of bodies formed for a short duration, etc. The salient features of the rates specified in the said Part III are indicated in the following paragraphs-

A. Individual, Hindu undivided family, association of persons, body of individuals, artificial juridical person.

Paragraph A of Part-III of First Schedule to the Bill provides following rates of income-tax:—

(i) The rates of income-tax in the case of every individual (other than those mentioned in (ii) and (iii) below) or Hindu undivided family or every association of persons or body of individuals, whether incorporated or not, or every artificial juridical person referred to in sub-clause (vii) of clause (31) of section 2 of the Act (not being a case to which any other Paragraph of Part III applies) are as under:—

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 %

(ii) In the case of every individual, being a resident in India, who is of the age of sixty years or more but less than eighty years at any time during the previous year,—

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 %

(iii) in the case of every individual, being a resident in India, who is of the age of eighty years or more at any time during the previous year,—

Upto Rs. 5,00,000  Nil.
Rs. 5,00,001 to Rs. 10,00,000  20 %
Above Rs 10,00,000  30 %

Surcharge

The amount of income-tax computed in accordance with the preceding provisions of this Paragraph shall be increased by a surcharge at the rate of,—

(i) 10 % of such income-tax in case of a person having a total income exceeding fifty lakh rupees but not exceeding one crore rupees;

(ii) 15% of such income-tax in case of a person having a total income exceeding one crore rupees but not exceeding two crore rupees;

(iii) 25% of such income-tax in case of a person having a total income exceeding two crore rupees but not exceeding five crore rupees; and

(iv) 37% of such income-tax in case of a person having a total income exceeding five crore rupees.

Marginal Relief

However, in case of above mentioned person having total income exceeding,-

(i) fifty lakh rupees but not exceeding one crore rupees, the total amount payable as income-tax and surcharge on such income shall not exceed the total amount payable as income-tax on a total income of fifty lakh rupees by more than the amount of income that exceeds fifty lakh rupees;

(ii) one crore rupees but not exceeding two crore rupees, the total amount payable as income-tax and surcharge on such income shall not exceed the total amount payable as income-tax on a total income of one crore rupees by more than the amount of income that exceeds one crore rupees;

(iii) two crore rupees but not exceeding five crore rupees, the total amount payable as income-tax and surcharge on such income shall not exceed the total amount payable as income-tax on a total income of two crore rupees by more than the amount of income that exceeds two crore rupees; and

(iv) five crore rupees, the total amount payable as income-tax and surcharge on such income shall not exceed the total amount payable as income-tax on a total income of five crore rupees by more than the amount of income that exceeds five crore rupees.

B. Co-operative Societies

Rate of income tax

In the case of co-operative societies, the rates of income-tax have been specified in Paragraph B of Part III of the First Schedule to the Bill. These rates continue to be the same as those specified for financial year 2018-19.

Surcharge

The amount of income-tax shall be increased by a surcharge at the rate of 12% of such income-tax in case of a co-operative society having a total income exceeding one crore rupees.

Marginal Relief

However, the total amount payable as income-tax and surcharge on total income exceeding one crore rupees shall not exceed the total amount payable as income-tax on a total income of one crore rupees by more than the amount of income that exceeds one crore rupees.

Paragraph B of Part III of the First Schedule to the Bill

In the case of every co-operative society,—

Rates of income-tax

(1) where the total income does not exceed Rs.10000 10 % of the total income;
(2) where the total income exceeds Rs.10000 not exceed Rs. 20000 Rs.1000 plus 20 % of the amount by which the total income exceeds Rs. 10,000;
(3) where the total income exceeds Rs. 20000 Rs. 3000 plus 30 % of the amount by which the total income exceeds Rs. 20,000

Surcharge on income-tax

The amount of income-tax computed in accordance with the preceding provisions of this Paragraph, or the provisions of section 111A or section 112 or section 112A of the Income-tax Act, shall, in the case of every co-operative society, having a total income exceeding one crore rupees, be increased by a surcharge for the purposes of the Union calculated at the rate of 12 % of such income-tax:

Marginal Relief

In the case of every co-operative society mentioned above having total income exceeding one crore rupees, the total amount payable as income-tax and surcharge on such income shall not exceed the total amount payable as income-tax on a total income of one crore rupees by more than the amount of income that exceeds one crore rupees.

C. Firms

Rate of income tax

In the case of firms, the rate of income-tax shall be 30% (specified in Paragraph C of Part III of the First Schedule to the Bill). This rate continues to be the same as that specified for financial year 2018-19.

Surcharge

The amount of income-tax shall be increased by a surcharge at the rate of 12% of such income-tax in case of a firm having a total income exceeding one crore rupees.

Marginal Relief

However, the total amount payable as income-tax and surcharge on total income exceeding one crore rupees shall not exceed the total amount payable as income-tax on a total income of one crore rupees by more than the amount of income that exceeds one crore rupees.

D. Local authorities

Rate of income tax

The rate of income-tax in the case of every local authority shall be 30% (specified in Paragraph D of Part III of the First Schedule to the Bill). This rate continues to be the same as that specified for the financial year 2018-19.

Surcharge

The amount of income-tax shall be increased by a surcharge at the rate of 12% of such income-tax in case of a local authority having a total income exceeding one crore rupees.

Marginal Relief

However, the total amount payable as income-tax and surcharge on total income exceeding one crore rupees shall not exceed the total amount payable as income-tax on a total income of one crore rupees by more than the amount of income that exceeds one crore rupees.

E. Companies

Rate of income tax

The rates of income-tax in the case of companies have been specified in Paragraph E of Part III of the First Schedule to the Bill. In case of domestic company, the rate of income-tax shall be 25% of the total income, if its total turnover or gross receipts in the previous year 2017-18 does not exceed four hundred crore rupees, and in all other cases the rate of Income tax shall be 30% of the total income. In the case of company other than domestic company, the rates of tax are the same as those specified for the financial year 2018-19.

Surcharge

Domestic company

Surcharge at the rate of 7% shall continue to be levied, if the total income of the domestic company exceeds one crore rupees but does not exceed ten crore rupees.

Surcharge at the rate of 12% shall continue to be levied if the total income of the domestic company exceeds ten crore rupees.

Companies other than domestic companies

The existing surcharge of 2% shall continue to be levied, if the total income exceeds one crore rupees but does not exceed ten crore rupees.

Surcharge at the rate of 5% shall continue to be levied, if the total income of the company other than domestic company exceeds ten crore rupees.

Other cases [including cases where provision of sub-section (2A) of section 92CE, sections 115O, 115QA, 115R, 115TA or 115TD are applicable]

The surcharge shall be levied at the rate of 12%.

Marginal Relief

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

Health and Education Cess

For financial year 2019-20, additional surcharge called the “Health and Education Cess on income-tax” shall be levied at the rate of 4% on the amount of tax computed, inclusive of surcharge (wherever applicable), in all cases. No marginal relief shall be available in respect of such cess.

Paragraph E of Part III of the First Schedule to the Bill

In the case of a company

Rates of income-tax

1. In the case of a domestic company,—

(i) where its total turnover or the gross receipt in the previous year 2017-18 does not exceed 400 hundred crore rupees; 25% of the total income
(ii) other than that referred to in item (i) 30% of the total income

2. In the case of a company other than a domestic company,—

(i) on so much of the total income as consists of,—

(a) royalties received from Government or an Indian concern in pursuance of an agreement made by it with the Government or the Indian concern after the 31st day of March, 1961 but before the 1st day of April, 1976; or

(b) fees for rendering technical services received from Government or an Indian concern in pursuance of an agreement made by it with the Government or the Indian concern after the 29th day of February, 1964 but before the 1st day of April, 1976, and where such agreement has, in either case, been approved by the Central Government

50%
(ii) on the balance, if any, of the total income 40%

 Surcharge on income-tax

The amount of income-tax computed in accordance with the preceding provisions of this Paragraph, or the provisions of section 111A or section 112 or section 112A of the Income-tax Act, shall, be increased by a surcharge for the purposes of the Union calculated,—

Domestic company:

(a) having a total income exceeding one crore rupees but not exceeding ten crore rupees, at the rate of 7 % of such income-tax; and

(b) having a total income exceeding ten crore rupees, at the rate of 12 % of such income-tax;

Company other than a domestic company:

(a) having a total income exceeding one crore rupees but not exceeding ten crore rupees, at the rate of 2% of such income-tax; and

(b) having a total income exceeding ten crore rupees, at the rate of 5% of such income-tax:

Marginal Relief

In the case of every company having a total income exceeding one crore rupees but not exceeding ten crore rupees, the total amount payable as income-tax and surcharge on such income shall not exceed the total amount payable as income-tax on a total income of one crore rupees by more than the amount of income that exceeds one crore rupees:

In the case of every company having a total income exceeding ten crore rupees, the total amount payable as income-tax and surcharge on such income shall not exceed the total amount payable as income-tax and surcharge on a total income of ten crore rupees by more than the amount of income that exceeds ten crore rupees

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