As we know that W.e.f FY 2020-21 i.e. budget 2020, two options of slab rate are available for Individual & HUF as per option given u/s 115BAC. Every taxpayer who is Individual or HUF, have to choose between (i)New tax regime (ii)Old tax regime. Salaried employee have to submit their option to their employer at the start of financial year to enable the employer to deduct the TDS as per choosen tax regime. The option is also required to selected while filing Income tax Return. Some notable points about NEW TAX REGIME as given u/s 115BAC are given below:-
- New tax regime is available only for Individual & HUF.
- Slab rates under New Tax regime are not differentiated on the basis of age group. Hence in new slab rate, same rate will be applied for individual aged above 60 or below 60 or above 80.
- Whether this OPTION is exercised only once or Every year:– If assessee is having no business income then this option shall be exercised in every coming year. But if person having income under the head “profit and gains of business or profession” and having opted for old regime can revoke that option only once and after that they will continue to be taxed under the new regime.
- Slab rate under New Tax regime are lesser than Old tax regime.
- Under New Tax regime, Rebate u/s 87A is available to those having total income upto Rs. 700000/- but under old tax regime, this rebate is available to those having total income upto only Rs. 500000/-.
- But if assesse opt for New Tax regime then he/she have to forgo some of exemtions & deductions.
But If option given under 115BAC is exercised to choose New Slab rate (Option A ) then following deduction & exemption shall not be available to the taxpayers (as updated by Finance ACT 2023):-
- Leave travel concession as contained in clause (5) of section 10;
- House rent allowance as contained in clause (13A) of section 10;
- Some of the allowance as contained in clause (14) of section 10;
- Allowances to MPs/MLAs as contained in clause (17) of section 10;
- Allowance for income of minor as contained in clause (32) of section 10;
- Exemption for SEZ unit contained in section 10AA;
- Deduction for entertainment allowance and employment/professional tax as contained in section 16;
- Interest under section 24 in respect of self-occupied or vacant property referred to in sub-section (2) of section 23. (Loss under the head income from house property for rented house shall not be allowed to be set off under any other head and would be allowed to be carried forward as per extant law);
- Additional deprecation under clause (iia) of sub-section (1) of section 32;
- Deductions under section 32AD, 33AB, 33ABA;
- Various deduction for donation for or expenditure on scientific research contained in sub-clause (ii) or sub-clause (iia) or sub-clause (iii) of sub-section (1) or sub-section (2AA) of section 35;
- Deduction under section 35AD or section 35CCC;
- Any deduction under chapter VIA (like section 80C, 80CCC, 80CCD, 80D, 80DD, 80DDB, 80E, 80EE, 80EEA, 80EEB, 80G, 80GG, 80GGA, 80GGC, 80IA, 80-IAB, 80-IAC, 80-IB, 80-IBA, etc). However, deduction under sub-section (2) of section 80CCD (employer contribution on account of employee in notified pension scheme) and section 80JJAA (for new employment) can be claimed.
- Set off of any loss,-carried forward or depreciation from any earlier assessment year, if such loss or depreciation is attributable to any of the deductions referred to in (a) above; or under the head house property with any other head of income; is not allowed.
BUT following allowances notified under section 10(14) of the Act to remain allowed to the Individual or HUF exercising option of NEW SLAB RATE (option A) under the proposed section (as updated by Finance Act 2023):-
- Transport Allowance granted to a divyang employee to meet expenditure for the purpose of commuting between place of residence and place of duty
- Conveyance Allowance granted to meet the expenditure on conveyance in performance of duties of an office;
- Any Allowance granted to meet the cost of travel on tour or on transfer;
- Daily Allowance to meet the ordinary daily charges incurred by an employee on account of absence from his normal place of duty.
- deduction under sub-section (2) of section 80CCD (employer contribution on account of employee in notified pension scheme).
- Deduction u/s section 80JJAA (for new employment).
- Deduction for family pension u/s 57 (added by finance act 2023)
- Exemption for VRS u/s 10(10C)
- Exemption of Gratuity u/s 10(10)
- Leave encashment exemption u/s 10(10AA)
- Interest on home loan for let out property u/s 24 (only from House property head).
- Deduction for agniveer contribution u/s 80CCH(2)
- Standard deduction of Rs. 50000/- from salary u/s 16 (added by finance act 2023)
- Rebate u/s 87A is allowed to resident individuals under New tax regime so that they need not pay tax if their total income is upto Rs. 700000/-. Under Old tax regime, this rebate is available only to individual with total income upto Rs. 500000/-.
Hence assessee is required to choose between old & new slab rates. Different decision may be useful for different assessees. Before taking any decision assessee should calculate his tax liability under both the options predicting his approximate income and then he has to choose the option in which his tax liability is less. A basic comparison of OLD & NEW tax regime is .given here . If any confusion in deciding between OLD and NEW Tax regime, Please refer solution provided by CACUBE.IN..Click here
Income Tax Rates for FY 2023-24 (AY 2024-25) for different catergories of assessees are given below:-
(A) Income tax Rates for Individual & HUF (who opted for new tax regime u/s 115BAC)
SLAB RATE UNDER NEW TAX Regime u/s 115BAC
Following tax rates will be applicable for Individual & HUF who opted for NEW TAX REGIME for financial year 2023-24 (assessment year 2024-25):-
| Total Income | Rate of tax |
| Up to Rs. 3,00,000 | Nil |
| From Rs. 3,00,001 to Rs. 6,00,000 | 5% |
| From Rs. 6,00,001 to Rs. 9,00,000 | 10% |
| From Rs. 9,00,001 to Rs. 12,00,000 | 15% |
| From Rs. 12,00,001 to Rs. 15,00,000 | 20% |
| Above Rs. 15,00,000 | 30% |
Notes for Tax rates in New Tax Regime:-
(1) Surcharge: – Surcharges is applicable at following rates:-
| Total Income | Rate of surcharge |
| Exceeds Rs. 50,00,000 but upto 1,00,00,000. | 10% of income tax |
| Exceeds Rs. 1,00,00,000 but upto 2,00,00,000. | 15% of income tax |
| Exceeds Rs. 2,00,00,000 | 25% of income tax |
(2) Health and Education cess: – 4% of income tax and surcharge.
(3)Rebate under section 87A, Under New tax regime, A resident individual whose total income does not exceed Rs. 700000/- can avail rebate u/s 87A which is an amount equal to 100% of income tax . Rebate u/s 87A is deductible from income tax before calculating education cess. Under Old tax regime, this rebate is available only to individual with total income upto Rs. 500000/-.
(4) If Net income exceeds Rs. 50 lakhs but does not exceeds Rs. 1 crore then surcharge @ 10% is applicable but if net income exceeds Rs. 1 crore then surcharge is applicable at the rate of 15% of income tax. Further surcharge is subject to marginal relief i.e amount payable as income tax & surcharge shall not exceed the total amount payable as income tax on total income of Rs. 50 Lakhs (or 1 Crore as the case may be) by more than the amount of income that exceeds Rs. 50 Lakhs ( or 1 crore as the case may be).
(5) Health and Education Cess” is 4% and it is to be levied on income tax & Surcharge. Surcharge is calculated on income tax before adding HEC. But HEC are calculated on income tax including surcharge if any.
(6) Alternate minimum tax: Tax payable cannot be less than 18.5% (+SC+EC+SHEC) of adjusted total income u/s 115JC. (Not applicable to those individual, HUF, AOP, BOI & AJP whose adjusted total income does not exceed Rs. 20 Lakhs AND who are not claiming any deduction u/s 10AA/ 35AD/ Chapter VI heading C-“deduction for certain incomes”.)
(7) Standard deduction of Rs. 50,000 to salaried individual, and deduction from family pension up to Rs. 15,000, is allowed allowed in new tax regime as provided by Finance Act 2023.
(B)-Income tax Rates for Individual & HUF (Not opting for New tax regime u/s115BAC), AOP(Association of person), BOI (body of individual) and AJP (artificial Judicial person and TRUST.
IF an individual or HUF opt for OLD slab rate (not opting New Tax Regime u/s 115BAC), then all exemption & deduction as per provisions of income tax are allowed and following slab rates are applicable for FY 2023-24( AY 2024-25):-
- Individual (resident or non-resident), who is of the age of less than 60 years on the last day of the relevant previous year and HUF:-–
| Net income range | Income-Tax rate |
| Up to Rs. 2,50,000 | Nil |
| Rs. 2,50,001- Rs. 5,00,000 | 5% |
| Rs. 5,00,001- Rs. 10,00,000 | 20% |
| Above Rs. 10,00,000 | 30% |
- Resident senior citizen, i.e., every individual, being a resident in India, who is of the age of 60 years or more but less than 80 years at any time during the previous year:–
| Net income range | Income-Tax rate |
| Up to Rs. 3,00,000 | Nil |
| Rs. 3,00,001 – Rs. 5,00,000 | 5% |
| Rs. 5,00,001- Rs. 10,00,000 | 20% |
| Above Rs. 10,00,000 | 30% |
- Resident super senior citizen, i.e., every individual, being a resident in India, who is of the age of 80 years or more at any time during the previous year:–
| Net income range | Income-Tax rate |
| Up to Rs. 5,00,000 | Nil |
| Rs. 5,00,001- Rs. 10,00,000 | 20% |
| Above Rs. 10,00,000 | 30% |
- Slab rate for association of person (AOP), Body of individuals(BOI) and artificial judicial person (AJP) & Trust. In case of AOP, BOI, AJP & Trust , option to choose new slab rate system-OPTION-A is not available and following tax rates are applicable without any choice:-
| Net income range | Income-Tax rate |
| Up to Rs. 2,50,000 | Nil |
| Rs. 2,50,001- Rs. 5,00,000 | 5% |
| Rs. 5,00,001- Rs. 10,00,000 | 20% |
| Above Rs. 10,00,000 | 30% |
Notes for Tax rates in Old Tax Regime:-
(1) Surcharge: – Surcharges is applicable at following rates:-
| Total Income | Rate of surcharge |
| Exceeds Rs. 50,00,000 but upto 1,00,00,000. | 10% of income tax |
| Exceeds Rs. 1,00,00,000 but upto 2,00,00,000. | 15% of income tax |
| Exceeds Rs. 2,00,00,000 but upto 5,00,00,000. | 25% of income tax |
| Exceeds Rs. 5,00,00,000. | 37% of income tax |
(2) Health and Education cess: – 4% of income tax and surcharge.
(3)Rebate under section 87A, A resident individual whose net income does not exceed Rs. 500000/- can avail rebate u/s 87A which is an amount equal to 100% of income tax or Rs. 12500/- whichever is less. Rebate u/s 87A is deductible from income tax before calculating education cess. In New tax regime this rebate of 100% tax is available for those having total income upto Rs. 700000/-.
(4) If Net income exceeds Rs. 50 lakhs but does not exceeds Rs. 1 crore then surcharge @ 10% is applicable but if net income exceeds Rs. 1 crore then surcharge is applicable at the rate of 15% of income tax. Further surcharge is subject to marginal relief i.e amount payable as income tax & surcharge shall not exceed the total amount payable as income tax on total income of Rs. 50 Lakhs (or 1 Crore as the case may be) by more than the amount of income that exceeds Rs. 50 Lakhs ( or 1 crore as the case may be).
(5) Health and Education Cess” is 4% and it is to be levied on income tax & Surcharge. Surcharge is calculated on income tax before adding HEC. But HEC are calculated on income tax including surcharge if any.
(6) Alternate minimum tax: Tax payable cannot be less than 18.5% (+SC+EC+SHEC) of adjusted total income u/s 115JC. (Not applicable to those individual, HUF, AOP, BOI & AJP whose adjusted total income does not exceed Rs. 20 Lakhs AND who are not claiming any deduction u/s 10AA/ 35AD/ Chapter VI heading C-“deduction for certain incomes”.)
(7) A standard deduction of `50,000/- is allowed from salary income but this is in lieu of the earlier exemption in respect of transport allowance and reimbursement of miscellaneous medical expenses.(Reimbursement by the employer for amount spent by employee for medical treatment of self or his family was exempt upto Rs. 15000/- in a year upto FY 2017-18 but this exemption is withdrawn from FY 2018-19 after introduction of standard deduction) However, the transport allowance at enhanced rate shall continue to be available to differently abled persons.
(8) W.e.f 1-4-2020 (FY 20-21), dividend distribution tax is abolished and dividend is made taxable in the hands of taxpayers at normal applicable rates. Dividend above Rs. 5000 is made subject to TDS @ 10% (TDS rate is 7.5% upto 31-3-2021)
(9) W.e.f. 1-4-2021 (FY 21-22), In order to rationalise tax exemption for the income earned by high income employees, tax exemption for the interest income earned on the employees’ contribution to various provident funds is restricted to the annual contribution of ` 2.5 lakh. This restriction shall be applicable only for the contribution made on or after 01.04.2021. Hence w.e.f 1-4-2021, Interest on that part of employee’s contribution to PF which exceeds 2.5 lakh in the year is taxable.
(10) A trust is chargeable to tax as per the slab rates which are applicable to an individual (not being a senior citizen or super senior citizen).
(C) Income tax Rates for Firms
- For FY 2023-24, Income of Firms is taxable at the rate of 30%.
- Business under Proprietorship is not covered here, Income from Proprietorship is taxable in the hand of Proprietor in his Individual return under the head “PGBP – Profits & Gains of Business or Profession” .
- Surcharge:- In case income of firm exceeds Rs. 1 crore then surcharge @ 12% of income tax is applicable which is subject to marginal relief ie. The amount payable as income tax & surcharge shall not exceed the 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.
- Health & Edu. Cess: 4% “Health and Education Cess” to be levied on the tax payable & Surcharge.
- Alternate minimum tax: Tax payable by firm cannot be less than 18.5% (+SC+EC+SHEC) of adjusted total income u/s 115JC.
(D) Income tax Rates for Companies
- Rate of income tax For FY 2023-24 for companies is as given below:
| Company | Category | Tax Rate |
|---|---|---|
| Domestic Company | (1) Domestic Company:-where total turnover or gross receipts during financial year 2018-19 does not exceed Rs. 400 crore. | 25% |
| (2) Where it opted for Section 115BA | 25% | |
| (3) Where it opted for Section 115BAA | 22% | |
| (4) Where it opted for Section 115BAB (In an effort to establish a globally competitive business environment for certain domestic companies, a concessional tax regime of 15 per cent tax was introduced by government for newly incorporated domestic manufacturing companies. It is proposed to extend the last date for commencement of manufacturing or production under section 115BAB by one year i.e. from 31st March, 2023 to 31st March, 2024. -Added by Finance Act 2022) | 15% | |
| (5) any other domestic Company | 30% | |
| Foreign Company | (1) Royalty received form Government or Indian concern in pursuance of an agreement made by it after 31st march 1961 but before 1st April 1976 or fee for rendering technical services in pursuance of an agreement made by it after 29th February 1964 but before 1st April 1976 And where such agreement has been approved by Central Government. | 50% |
| (2) Other Income | 40% |
- Surcharge: If net income of a company does not exceed Rs. 1 crore, surcharge will be nil . For other cases, rate of Surcharge to be calculated on Income tax are given below:- (However Surcharges are subject to marginal Relief 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)
| Company | If net income is more than Rs. 1 crore but not more than Rs. 10 crore. | If net income is more than Rs. 10 crore. |
|---|---|---|
| Domestic Company | 7% | 12% |
| Foreign Company | 2% | 5% |
- HEC: 4% “Health and Education Cess” to be levied on the tax & surcharge.
- A company is required to pay higher of the tax calculated under the following two provisions:
- Tax liability as per the Normal provisions of income tax act(as stated above)
- Tax liability as per the MAT provisions given in Sec 115JB(18.5 % of Book Profits plus HEC & surcharge if applicable. ( Note that Section 115JB of the Income-tax Act was amended by the Taxation Laws (Ordinance), 2019 (‘Ordinance’) to reduce the rate of MAT from 18.5% to 15% with effect from Assessment Year 2020-21.However, the Taxation Laws (Amendment) Bill, 2019, as tabled in the parliament on 25-11-2019, proposes to insert a proviso to section 115JB(1) that the rate of minimum alternative tax shall be reduced from 18.5% to 15% from previous year commencing on or after the April 1, 2020)
(E) Income tax Rates for Co-operative Societies
- Rates of income tax For FY 2023-24 for co-operative societies are as given below:
| Net Income Range | Rate of Tax |
|---|---|
| Upto Rs. 10000/- | 10% |
| Rs. 10000 to Rs. 20000 | 20% |
| Above Rs. 20000/- | 30% |
- Surcharge:- As per amendment by budget 2022, In case income of co-operative society exceeds Rs. 1 crore but do not exceed 10 crore, then surcharges applicable is 7% but in case income exceeds 10 crore then surcharge @ 12% of income tax is applicable which is subject to marginal relief ie. The amount payable as income tax & surcharge shall not exceed the 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.
- EC & SHEC: 4% “Health and Education Cess” to be levied on the tax & surcharge.
- Alternate minimum tax: Tax payable by co-operative society cannot be less than 15% (reduced from 18.5% by budget 2022) (+SC+EC+SHEC) of adjusted total income u/s 115JC.
- The Finance Act, 2020 has inserted a new Section 115BAD in Income-tax Act to provide an option to the co-operative societies to get taxed at the rate of 22% plus 10% surcharge and 4% cess. The resident co-operative societies have an option to opt for taxation under newly Section 115BAD of the Act w.e.f. Assessment Year 2021-22. The option once exercised under this section cannot be subsequently withdrawn for the same or any other previous year.
- If the new regime of Section 115BAD is opted by a co-operative society, its income shall be computed without providing for specified exemption, deduction or incentive available under the Act. The societies opting for this section have been kept out of the purview of Alternate Minimum Tax (AMT). Further, the provision relating to computation, carry forward and set-off of AMT credit shall not apply to these assessees
- The option to pay tax at lower rates shall be available only if the total income of co-operative society is computed without claiming specified exemptions or deductions
- The finance Act 2023, has provided , 15 per cent concessional tax to promote new manufacturing co-operative society In order to promote the growth of manufacturing in co-operative sector, a new co-operative society formed on or after 01.04.2023, which commences manufacturing or production by 31.03.2024 and do not avail of any specified incentive or deduction, is proposed to be allowed an option to pay tax at a concessional rate of 15 per cent similar to what is available to new manufacturing companies.
(F) Income tax Rates for Local Authorities
- For FY 2023-24, Income of Local Authority is taxable at the rate of 30%.
- Surcharge:- In case income exceeds Rs. 1 crore then surcharge @ 12% of income tax is applicable which is subject to marginal relief ie. The amount payable as income tax & surcharge shall not exceed the 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.
- Health & Edu. Cess:The existing 3% education cess is replaced by a 4% “Health and Education Cess” to be levied on the tax & surcharge.
- Alternate minimum tax: Tax payable cannot be less than 18.5% (+SC+EC+SHEC) of adjusted total income u/s 115JC.
(G) Income taxable at rate specified in Income tax Act. (Income taxable at special rates)
Following given are list of some important cases of income which is taxable at rates specified in Income-tax Act and not at rates mentioned above:-
| Section | Income | Income tax rate |
|---|---|---|
| 111A | Short term capital Gain (where STT applicable) | 15% |
| 112 | Long Term Capital Gain | 10% / 20% |
| 112A | Long Term Capital Gain in excess of Rs. 1 lakh | 10% |
| 115BB | Winning from lotteries, Crossword puzzles, race horse (excluding activity of owning & maintaining race horses), card games and other games of gambling | 30% |
| 115B | Profits & gains of Life insurance business | 12.5% |
(H) Some important recent changes in income tax:-
- Turnover limit for Maintenance of accounts, Tax audit & persumptive Taxation (Section 44AA, 44AB, 44AD & 44ADA)
| FY | Limit u/s 44AA | Turnover limit for Tax Audit u/s 44AB for Business | Turnover limit for Tax Audit u/s 44AB for Profession | Turnover Limit for persumptive Taxation for Business u/s 44AD | Turnover Limit for persumptive Taxation for Profession u/s 44ADA |
| 2019-20 | For Business: Income>2.5lakh Turnover>25lakh (any of last 3 year) since FY 2017-18 For profession: GR> 150000 | (Cash transaction>5%): 1 cr. (Cash transaction<=5%): 5 cr. | 50 Lakhs (since FY 2016-17) | 2 crore (since FY 2016-17) | 50 Lakhs (since FY 2016-17) |
| 2020-21 | IFor Business: Income>2.5lakh Turnover>25lakh (any of last 3 year) since FY 2017-18 For profession: GR> 150000 | (Cash transaction>5%): 1 cr. (Cash transaction<=5%): 5 cr. | 50 Lakhs (since FY 2016-17) | 2 crore (since FY 2016-17) | 50 Lakhs (since FY 2016-17) |
| 2021-22 | For Business: Income>2.5lakh Turnover>25lakh (any of last 3 year) since FY 2017-18 For profession: GR> 150000 | (Cash transaction>5%): 1 cr. (Cash transaction<=5%): 10 cr. | 50 Lakhs(since FY 2016-17) | 2 crore (since FY 2016-17) | 50 Lakhs (since FY 2016-17) |
| 2022-23 | For Business: Income>2.5lakh Turnover>25lakh (any of last 3 year) since FY 2017-18 For profession: GR> 150000 | (Cash transaction>5%): 1 cr. (Cash transaction<=5%): 10 cr. | 50 Lakhs(since FY 2016-17) | 2 crore (since FY 2016-17) | 50 Lakhs (since FY 2016-17) |
| 2023-24 | For Business: Income>2.5lakh Turnover>25lakh (any of last 3 year) since FY 2017-18 For profession: GR> 150000 | (Cash transaction>5%): 1 cr. (Cash transaction<=5%): 10 cr. | 50 Lakhs (since FY 2016-17) | (Cash receipts>5%): 2 cr. (Cash receipts<=5%): 3 cr. | (Cash receipts>5%): 50 lakh (Cash receipts<=5%): 75 lakh |
- W.e.f. 1-4-2021 (FY 21-22), In order to rationalise tax exemption for the income earned by high income employees, tax exemption for the interest income earned on the employees’ contribution to various provident funds is restricted to the annual contribution of ` 2.5 lakh. This restriction shall be applicable only for the contribution made on or after 01.04.2021. Hence w.e.f 1-4-2021, Interest on that part of employee’s contribution to PF which exceeds 2.5 lakh in the year is taxable.
- W.e.f FY 2021-22, senior citizen pensioners who are of 75 years of age or above, and are having only interest income apart from the pension income, are not required to file income tax return if the full amount of tax payable has been deducted by the paying bank.
- W.e.f FY 2021-22, In order to reduce compliance burden, the time-limit for re-opening of assessment is being reduced to 3 years from the current 6 years from the end of the relevant assessment year. Re-opening up to 10 years is proposed to be allowed only if there is evidence of undisclosed income of ` 50 lakh or more for a year.
- W.e.f. FY 2023-24, Rebate u/s 87A is allowed to resident individuals under New tax regime so that they need not pay tax if their total income is upto Rs. 700000/-. Under Old tax regime, this rebate is available only to individual with total income upto Rs. 500000/- in from FY 2019-20 to 2023-24. Earlier to 2019-20 this rebate was available only upto those having total income upto Rs. 350000/-.
- W.e.f. FY 2023-24, Standard deduction of ` 50,000 to salaried individual, and deduction from family pension up to ` 15,000, are also allowed to those who opted for New Tax regime u/s 115BAC.
- Exemption u/s 54 extended to purchase /construction of two residential houses. Notional Rent on second self occupied house property is exempt from tax. refer section 23 & 24.
- In the Union Budget, 2017, corporate tax rate was reduced to 25% for companies whose turnover was less than `50 crore in financial year 2015-16. In Budget 2018, the benefit of this reduced rate of 25% also to companies who have reported turnover up to`250 crore in the financial year 2016-17. In Budget 2019, the benefit of this reduced rate of 25% also to companies who have reported turnover up to`400 crore in the financial year 2017-18.
- Long term capital gains ( arising from transfer of listed equity shares, units of equity oriented fund and unit of a business trust) exceeding `1 lakh shall be taxed at the rate of 10% without allowing the benefit of any indexation. However, all gains up to 31st January, 2018 will be grandfathered. For example, if an equity share is purchased six months before 31st January, 2018 at `100/- and the highest price quoted on 31st January, 2018 in respect of this share is `120/-,there will be no tax on the gain of `20/- if this share is sold after one year from the date of purchase. However, any gain in excess of `20 earned after 31st January, 2018 will be taxed at 10% if this share is sold after 31st July, 2018. The gains from equity share held up to one year will remain short term capital gain and will continue to be taxed at the rate of 15%.
- W.e.f 1-4-2020 (FY 20-21), dividend distribution tax is abolished and dividend is made taxable in the hands of taxpayers at normal applicable rates. Dividend above Rs. 5000 is made subject to TDS @ 10% (TDS rate is 7.5% upto 31-3-2021)
- PAN to be allotted instantly on basis on Aadhar.
- The concept of “Updated Return” is introduced by Finance Act 2022. An “Updated return” can be filed within two years from the end of the relevant assessment year. Some taxpayers may realize that they have committed omissions or mistakes in correctly estimating their income for tax payment. Updated Return will provide an opportunity to correct such errors, Assessee file an Updated Return on payment of additional tax.
- By Finance Act 2022, It was provided that no set off, of any loss shall be allowed against undisclosed income detected during search and survey operations.
- Finance Act 2023:- Penalty for cash loan/transactions against primary co-operatives It is proposed to amend section 269SS of the Act to provide that where a deposit is accepted by a primary agricultural credit society or a primary co-operative agricultural and rural development bank from its member or a loan is taken from a primary agricultural credit society or a primary co-operative agricultural and rural development bank by its member in cash, no penal consequence would arise, if the amount of such loan or deposit in cash is less than ` 2 lakh. Further, section 269T of the Act is proposed to be amended to provide that where a deposit is repaid by a primary agricultural credit society or a primary co-operative agricultural and rural development bank to its member or such loan is repaid to a primary agricultural credit society or a primary co-operative agricultural and rural development bank by its member in cash, no penal consequence shall arise, if the amount of such loan or deposit in cash is less than ` 2 lakh.
- By Finance Act 2023: Increasing threshold limits for presumptive taxation schemes In order to ease compliance and to promote non-cash transactions, it is proposed to increase the threshold limits for presumptive scheme of taxation for eligible businesses from ` 2 crore to ` 3 crore and for specified professions from ` 50 lakh to` 75 lakh. The increased limit will apply only in case the amount or aggregate of the amounts received during the year, in cash, does not exceed five per cent of the total gross receipts/turnover.
- As per the Finance Act 2023, capital gains of investors in funds with 35% or less of its assets in domestic equities will be classified as Short-Term capital gains, regardless of the period of holding. This will come into effect on April 1, 2023. NOW w.e.f. 1.4.2023 debt fund will be subject to short-term capital gain irrespective of holding period and gain from such funds will be taxed as per applicable slab rate. The impact of this change is likely to be felt not only by debt funds but also by other categories of funds, such as ETFs, funds of funds, international funds, and gold funds.