Hello Friends, in today’s time, taxation has become an integral part of our life. In almost every activity we have to pay tax. For example, if we purchase any goods/service for ultimate consumption purchase then we have to pay GST, if we owned a house then we have to pay house tax, if we are providing our services then we have to pay professional Tax (applicable in some states) and at the end of the day, on earned income we have to pay Income Tax. In today’s time, we work hard to earn money and at the end of the day, we have to pay approx 31.2% tax (In case of Individual on income in excess of Rs.10 Lakh). As quoted in a famous book, middle Income Group is working atleast 2-3 Months to pay taxes to government. In this article, we are going to discuss on “Taxation Structure in India on Various Assessee/Entity” based on Taxation rate applicable for A.Y -2020-2021

1. Individual/Proprietorship Firm/AOP/BOI In case of Individual, taxation is done according to slab rates.

Net Income (below 60 Yrs) Tax Rate Surcharge subject to marginal relief Cess
Upto Rs.2,50,000 Nil _ _
Rs.2,50,000 to Rs.5,00,000 5% 4%
Rs.5,00,000 to Rs.10,00,000 20% 4%
Rs.10,00,000 to Rs.50,00,000 30% 4%
Rs.50,00,000 to Rs.1,00,00,000 30% 10% 4%
Rs.1,00,00,000 to Rs.2,00,00,000 30% 15% 4%
Rs.2,00,00,000 to Rs.5,00,00,000 30% 25% 4%
Rs.5,00,00,000 & above 30% 37% 4%

In case of resident senior Citizen (60 Yrs or more at any time during the year) Basic exemption limit is Rs.3,00,000/- instead  of Rs.2,50,000/-

In case of resident super senior Citizen (80 Yrs or more at any time during the year) Basic exemption limit is Rs.5,00,000/- instead of Rs.2,50,000/-

To lower taxation burden on Individuals, department is giving Rebate U/s -87A amounting to Rs.12,500/- if your net taxable income does not exceed Rs.5,00,000/- However, if your taxable income is above Rs.5,00,000/- then you are not eligible to get rebate U/s -87A

Along with this, the assessee is eligible to claim deduction U/s 24 (b) as interest on borrowed capital up to Rs.2,00,000/- on the accrual basis. Please note that deduction of Rs.2,00,000/- is allowed only in case of acquiring or construction of a property. If a loan is taken for reconstruction, repairs or renewals of a house property, then the maximum deductible amount is Rs.30,000/- Further principal repaid for this loan is allowed U/s 80C up to Rs.1,50,000/-

To create investment habits in citizens of India, the government in giving deduction U/s- 80C To 80 U. For example, U/s -80C you can invest upto Rs.1,50,000/- in PPF, Sukanya Samridhi Yojna, 5 years lock in Period FDR Etc.

U/s – 80D for health Insurance & U/s 80TTA & 80TTB on Interest earned from Bank from Saving Account and Deposits (In case of Senior & Super Senior Citizens) etc.

In India, the maximum tax burden falls on salaried class because they are not very much aware of, above-described Deduction and Investment options. Small Awareness can create huge difference in Tax Amount. It is suggested to all readers, if they are not aware of these tax-saving tips then kindly search on google about these things, so many articles are already published on these tips. If your query is not resolved from freely available material then purchase books on Direct Tax or Consultant a Tax Expert. Please note that, taxability of the Proprietorship firm & HUF is the same as individual Assessee.

2. Partnership Firm: The taxation rate on Partnership Firm is 31.2% without any slab benefits. This rate is even more than the tax rate applicable in case of Limited Companies.

If total Income exceeds Rs.1 Crore, then Surcharge of 12% is also applicable (subject to marginal relief)

Section 44AD – is applicable in case of resident Individual, HUF or a partnership Firm (LLP Firm is excluded from the benefit of this section).

Benefit of this section is that, if eligible assessee Turnover or Gross Receipt is upto 2 Crore then they can declare a estimate profit of 8%/6% (in case of Digital Payment) or more of total turnover or Gross Receipt then they are not required to maintain books of accounts and also not required to get their books of accounts audited from Chartered Accountants.

If the firm adopted this scheme them they have to pay tax @ 31.2% on 8% declared Profit.

3. Domestic Company – In case of Domestic company, there is 4 types of taxation rates

Where its total turnover or gross receipt during the previous year 2017-18 does not exceed Rs. 400 crore 25%
Where it opted for Section 115BA 25%
 Where it opted for Section 115BAA 22%
 Where it opted for Section 115BAB 15%
Any other domestic company 30%

Section115BAA & Section 115BAB are newly inserted to boost manufacturing companies in India

In case of Companies rate of surcharge is 7% of such tax, where total income exceeds one crore rupees but not exceeding ten crore rupees and at the rate of 12% of such tax, where total income exceeds ten crore rupees. However, the rate of surcharge in case of a company opting for taxability under Section 115BAA or Section 115BAB shall be 10% irrespective of amount of total income.

This article is for the purpose of information and shall not be treated as a solicitation in any manner and for any other purpose whatsoever. It shall not be used as a legal opinion and not be used for rendering any professional advice. This article is written on the basis of the author’s person experience and provision applicable as on date of writing of this article. Adequate attention has been given to avoid any clerical/arithmetical error, however; if it still persists kindly intimate us to avoid such error for the benefits of others readers.

The Author can be reached at mail –shivsharma786@gmail.com and Mobile/Whatsapp – 9911303737

Author Bio

Qualification: CA in Practice
Company: Shiv Kumar Sharma & Associates
Location: Delhi, New Delhi, IN
Member Since: 03 Dec 2018 | Total Posts: 14
My Self CA. Shiv Kumar Sharma. I am a member of "The Institute of Chartered Accountants of India" since 2012. I have Qualified my B.Com (H) in 2010 And Cleared CS- Executive Exam in June 2013. Currently, I am in Practice and dealing in Direct and Indirect taxation along with ROC Compliances. View Full Profile

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