The Finance Bill, 2020 has proposed concessional tax regime for individual and HUF by inserting Section 115BAC to the Income-tax Act, 1961. This provision provides an option for payment of taxes at the reduced rates. However, the benefit of reduced tax rates is available only after forgoing certain deductions and exemptions.
To get this concessional tax regime, an Individual and HUF is required to exercise the option on or before the due date of furnishing the return of income. Once the option is exercised, it will be applicable to forthcoming years as well if assessee is earning the business income. If the taxpayer does not have any business income, the assessee shall
have a choice to decide every year if he wants to opt for concessional tax regime. The proposed Section 115BAC did not give any reference to the taxpayers earning professional income and it was believed that this class was intentionally left out, which brings them at par with those taxpayers who are not earning business income.
The Finance Bill, 2020 (as passed by the Lok Sabha) makes the necessary amendments to section 115BAC to provide that taxpayers having income from profession shall also get only one time option to opt for concessional tax regime. The taxpayers earning business income or professional income are now at par as far as this provision is concerned.
CA MONIL SHAH