Rates of Income Tax

A. Normal Rates

1. Tax Rates for Individuals/HUF/AOP/BOI (other than individual or HUF exercising option to pay tax as per the provisions of Section 115BAC)

For A.Y. 2020-21 & 2021-22 (Refer Notes)
Income	Rate (%)
Up to ₹ 250,000*	NIL
₹ 250,001 to ₹ 500,000	5%
₹ 500,001 to ₹ 1,000,000	20%
Above ₹ 1,000,000	30%

Rates of Surcharge
Sr. No.	Surcharge in case Total Income exceeds	Rate of Surcharge (%)
(a)	₹ 50,00,000 (including the income under the provisions of Section 111A and Section 112A)	10%
(b)	₹ 1,00,00,000 (including the income under the provisions of Section 111A and Section 112A)	15%
(c)	₹ 2,00,00,000 (excluding the income under the provisions of Section 111A and Section 112A)	25%
(d)	₹ 5,00,00,000 (excluding the income under the provisions of Section 111A and Section 112A)	37%
(e)	₹ 2,00,00,000 (including the income under the provisions of Section 111A and Section 112A), if it is not covered by (c) & (d) above	15%
Surcharge on the amount of income-tax payable in accordance with the provisions of Section 111A and 112A shall not exceed 15%
Health and Education Cess @ 4% leviable on tax including surcharge

Notes:

1. * Threshold limit for a resident individual who is of the age of 60 years or more but less than 80 years will be ₹ 3,00,000/- and for a resident individual who is of the age of 80 years or more will be ₹ 5,00,000/-
2. Rebate up to ₹ 12,500/- from tax if taxable income is up to ₹ 5,00,000/-, to a resident individual
3. Marginal relief available.
4. From A.Y. 2020-21, the individual and HUF have the option to pay tax in accordance with the provisions of Section 115BAC.

2. Tax Rates for Individual / HUF exercising option to pay tax as per the provisions of Section 115BAC (effective from A.Y. 2020-21)

For A.Y. 2021-22 (Refer Notes)
Income	Rate (%)
Up to ₹ 250,000	NIL
₹ 250,001 to ₹ 500,000	5%
₹ 500,001 to ₹ 750,000	10%
₹ 750,001 to ₹ 1,000,000	15%
₹ 1,000,001 to ₹ 1,250,000	20%
₹ 1,250,001 to ₹ 1,500,000	25%
Above ₹ 1,500,000	30%

Notes:

1. The new scheme is optional and the assessees will have to opt for being covered by the new scheme.
2. Individual or HUF not having any business income -
   1. The option is required to be exercised along with the filing of the return of income under section 139(1) for the year
   2. The option can be exercised for every previous year.
3. Individual or HUF having business income –
   1. The option is required to be exercised on or before the due date of filing the return of income and such option once exercised shall apply for that previous year and to all subsequent years.
   2. If the assessee having business income has opted to be governed by the new scheme, then, subsequently, he can opt out only once and thereafter, he will never be eligible to opt for the new scheme again except when he ceases to have any business income.
4. The above concessional tax rates can be opted after foregoing certain exemptions / deductions such as:
   1. Leave Travel Concession – section 10(5)
   2. House Rent Allowance – section 10(13A)
   3. Specified allowances exempt under section 10(14) (allowances granted to employees other than transport allowance, conveyance allowance, per-diems and travel and transfer allowance)
   4. Allowances to MPs / MLAs – section 10(17)
   5. Clubbed income of minor upto ₹ 1,500 – section 10(32)
   6. Exemption for unit in SEZ – section 10AA
   7. Standard and other deductions (including profession tax) from salary – section 16
   8. Interest in respect of Self Occupied Property – section 24(b)
   9. Set off of loss under the head income from house property against other heads – section 71
   10. Additional depreciation – section 32(1)(iia)
   11. Deduction under sections 32AD, 33AB and 33ABA
   12. Specified deduction for donations or for expenditure on scientific research – section 35(1)(ii)/(iia)/(iii) or section 35(2AA)
   13. Weighted deduction for expenditure on specified business / agricultural extension project – section 35AD and section 35CCC
   14. Standard deduction for family pension – 57(iia)
   15. Deductions under Chapter VI-A (such as section 80C, 80D, 80 TTA, 80TTB, 80G etc.) other than the following:-
       1. 80CCD(2) – employer contribution in notified pension scheme
       2. 80JJAA – employment of new employees
       3. 80LA – IFSC centre
   16. Exemption in respect of voucher granted for free food and beverages
   17. Any exemption or deduction for allowances or perquisites provided under any other law
5. There is no separate higher threshold for senior and very senior citizens in the optional scheme.
6. Surcharge and Cess remain unchanged.
7. Once this option is exercised, provisions relating to Alternate Minimum Tax and Credit relating to the same will not be applicable.

3. Tax Rates for Firms (including Limited Liability Partnership)

Asst. Year	Tax %	Surcharge %	Health & Education Cess%	Total %
2020-21	30	0/12	4	31.20/34.944
2021-22	30	0/12	4	31.20/34.944
Surcharge applicable in case of firm having a total income exceeding ₹ 1,00,00,000/-.

Notes:

1. Marginal relief available.

4. Tax Rates for Domestic Companies (not exercising option to pay tax as per the provisions of Section 115BAA or Section 115BAB)

Asst. Year	Tax %	Surcharge %	Health & Education Cess%	Total %	Conditions
2020-21	30	0/7/12	4	31.2/33.384/34.944	-
	25	0/7/12	4	26/27.82/29.12	Turnover or gross receipts for the domestic company in previous year 2017-18 (for AY 2020-21) doesn’t exceed ₹ 400 crore.
2021-22	30	0/7/12	4	31.2/33.384/34.944	-
	25	0/7/12	4	26/27.82/29.12	Turnover or gross receipts for the domestic company in previous year 2018-19 (for AY 2021-22) doesn’t exceed ₹ 400 crore.
Surcharge @ 7% if total income above ₹ 1,00,00,000/- and Surcharge @ 12% applicable if total income above ₹ 10,00,00,000/-.

Notes:

1. Marginal relief available.

5. Tax Rates for Domestic Companies exercising an option to pay tax as per the provisions of Section 115BAA (effective from A.Y. 2020-21)

Type of Income	Tax %	Surcharge %	Health & Education Cess%	Total %
Total Income	22	10	4	25.168
Surcharge is applicable irrespective of the amount of the total income The income to which any other provisions of Chapter XII are applicable shall be charged to tax at the rates as provided in those respective provisions. It shall be subject to surcharge of 10% and Health & Education Cess of 4%. The provisions of Section 115JAA and Section 115JB shall not apply to the companies exercising option to pay tax under Section 115BAA

Applicability

This option is available to any domestic company which satisfies certain conditions and which exercises the option on or before the due date specified under Section 139(1) for furnishing returns of income for any previous year relevant to the assessment year commencing on or after 1st April, 2020.

Conditions

1. The total income of the company shall be computed without any deductions under the provisions of Section 10AA or Section 32(1)(iia) i.e. additional depreciation or Section 32AD or Section 33AB or Section 33ABA or Section 35(1)(ii), (iia) or (iii) or Section 35(2AA) or Section 35(2AB) or Section 35AD or Section 35CCC or Section 35CCD or Chapter VI-A (other than the provisions of Section 80JJAA or 80M or 80LA).
2. Carried forward losses or unabsorbed depreciation which are attributable to any of the above referred deductions (including deemed losses or depreciation under Section 72A) shall not be available for set off and it shall be deemed that full effect have been given to such losses or depreciation.
3. The total income shall be computed by claiming depreciation under Section 32 (other than additional depreciation) which shall be determined in a prescribed manner.

6. Tax Rates for Domestic Companies exercising an option to pay tax as per the provisions of Section 115BAB (effective from A.Y. 2020-21)

Type of Income	Tax %	Surcharge %	Health & Education Cess%	Total %
Income derived from or incidental to manufacturing or production of an article or thing	15	10	4	17.16
Income which is neither derived from nor incidental to manufacturing or production of an article or thing	22	10	4	25.168
Short-term capital gain derived from transfer of a capital asset on which no depreciation is allowable	22	10	4	25.168
Excess profits determined by the AO under sub-section (6)	30	10	4	34.32
Surcharge is applicable irrespective of the amount of the total income The income to which any other provisions of Chapter XII are applicable shall be charged to tax at the rates as provided in those respective provisions. It shall be subject to surcharge of 10% and Health & Education Cess of 4%. The provisions of Section 115JB shall not apply to the companies exercising option to pay tax under Section 115BAB

Applicability

This option is available to a domestic company which has been set-up and registered on or after 1st October, 2019 and engaged in the business of manufacture or production of any article or thing. The option is required to be exercised on or before the due date specified under Section 139(1) for furnishing the first of the returns of income for any previous year relevant to the assessment year commencing on or after 1st April, 2020.

Conditions

1. Manufacturing or production of an article or thing has been commenced on or before 31st March, 2023.
2. The business is not formed by splitting up, or the reconstruction, of a business already in existence.
3. The company does not use any machinery or plant previously used for any purpose. The usage of second-hand machinery or plant to the extent of 20% of the total value of machinery or plant and usage of machinery or plant which were previously used outside India are permitted.
4. The company does not use any building previously used as a hotel or a convention centre in respect of which deduction under Section 80-ID has been allowed.
5. 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 company engaged in the business of generation of electricity shall be eligible to opt for taxation as per the provisions of this Section. 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 in this behalf
6. The total income of the company shall be computed without any deductions under the provisions of Section 10AA or Section 32(1)(iia) i.e. additional depreciation or Section 32AD or Section 33AB or Section 33ABA or Section 35(1)(ii), (iia) or (iii) or Section 35(2AA) or Section 35(2AB) or Section 35AD or Section 35CCC or Section 35CCD or Chapter VI-A (other than the provisions of Section 80JJAA or 80M).
7. Carried forward losses or unabsorbed depreciation which are deemed to be so under Section 72A and which are attributable to any of the above referred deductions shall not be available for set off and it shall be deemed that full effect have been given to such losses or depreciation.
8. The total income shall be computed by claiming depreciation under Section 32 (other than additional depreciation) which shall be determined in a prescribed manner.

7. Tax Rates for foreign companies (on income other than Royalty and Fees for Technical Services)

Asst. Year	Tax %	Surcharge %	Health & Education Cess%	Total %
2020-21	40	0/2/5	4	41.60/42.432/43.68
2021-22	40	0/2/5	4	41.60/42.432/43.68

Notes:

1. Surcharge @ 2% if total income is above ₹ 1,00,00,000/- and up to ₹ 10,00,00,000/- and @ 5% if total income above ₹ 10,00,00,000/-.
2. Marginal relief available.

8. Dividend Distribution Tax (A.Y. 2020-21)

Income	Tax %	Surcharge %	Health & Education Cess %	Total %
(i) Under Section 115-O
Other than deemed dividend u/s. 2(22)(e)	17.647	12	4	20.5552941
(ii) U/s. 115-O applicable to deemed dividend u/s. 2(22)(e)	30	12	4	34.944
(iii) Buy-back of shares by domestic companies	20	12	4	23.296

Notes:

1. Parent company will be allowed set off of dividend received from its subsidiary in computing its dividend distribution tax subject to certain conditions.
2. Earlier Dividend Distribution tax was applicable on buy back of shares only in case of unlisted shares, now, it has been extended to listed shares as well.
3. The domestic company is not required to pay Dividend Distribution Tax under Section 115-O on the dividend declared, distributed or paid on or after 1st April, 2020.

9. Tax Rates for Co-operative Society (not exercising option to pay tax as per the provisions of Section 115BAD)

Income A.Ys 2020-21 & 2021-22	Rate %	Health Education Cess	Total %
Up to ₹ 10,000	10	4	10.40
₹ 10,001 to
₹ 20,000	20	4	20.80
₹ 20,001 and above	30	4	31.20
Surcharge of 12% applicable, if total income exceeds ₹ 1,00,00,000/-.

Notes:

1. Marginal relief available.

10. Tax Rates for Resident Co-operative Society exercising option to pay tax as per the provisions of Section 115BAD (effective from A.Y. 2021-22)

Type of Income	Tax %	Surcharge %	Health & Education Cess%	Total %
Total Income	22	10	4	25.168
Surcharge is applicable irrespective of the amount of the total income The income to which any other provisions of Chapter XII are applicable shall be charged to tax at the rates as provided in those respective provisions. It shall be subject to surcharge of 10% and Health & Education Cess of 4%. The provisions of Section 115JC and Section 115JD shall not apply to the co-operative societies exercising option to pay tax under Section 115BAD

Applicability

This option is available to any resident co-operative society which satisfies certain conditions and which exercises the option on or before the due date specified under Section 139(1) for furnishing returns of income for any previous year relevant to the assessment year commencing on or after 1st April, 2021.

Conditions

1. The total income of the co-operative society shall be computed without any deductions under the provisions of Section 10AA or Section 32(1)(iia) i.e. additional depreciation or Section 32AD or Section 33AB or Section 33ABA or Section 35(1)(ii), (iia) or (iii) or Section 35(2AA) or Section 35(2AB) or Section 35AD or Section 35CCC or Chapter VI-A (other than the provisions of Section 80JJAA or 80LA).
2. Carried forward losses or unabsorbed depreciation which are attributable to any of the above referred deductions shall not be available for set off and it shall be deemed that full effect have been given to such losses or depreciation.
3. The total income shall be computed by claiming depreciation under Section 32 (other than additional depreciation) which shall be determined in a prescribed manner.

B. Special Rates

1. Long Term Capital Gains

1. On Equity shares and units

   Long term capital gains arising on transfer of equity shares on a recognised stock exchange in India or units of an equity oriented Mutual Fund (if more than 65% of total proceeds of the fund are invested in equity shares), and on which Securities Transaction Tax is chargeable.

For all Assessees	A.Ys 2020-21 & 2021-22
Up to ₹ 1,00,000	Nil
Above ₹ 1,00,000	10%

2. On other assets and equity shares, units except falling in (a) above for A.Ys. 2020-2021 and 2021-22.

Income Tax on Long Term Capital Gains
Resident Individual or HUF	20%
Domestic Companies	20%
Non-residents	20%
NRIs (for gains u/s. 115E)	10%
Any other case	20%
Surcharge and Health and Education Cess as applicable

Notes:

1. In case of Resident Individual and HUF, where tax liability arises only because of the inclusion of long term capital gains, tax to be levied at 20% or 10% as the case may be, on the excess over the minimum exemption limit.
2. No deduction under Chapter VIA (80C to 80U).

2. Short Term Capital Gains

1. On Equity shares and units

   Short term capital gains arising on transfer of equity shares on recognised stock exchange in India or units of an Equity Oriented Mutual Fund (if more than 65% of total proceeds of the fund are invested in equity shares), and on which Securities Transaction Tax is chargeable.

For All Assessees

15% plus (Health and Education Cess) as applicable

Notes:

1. In case of resident individual and HUF, relief from STCG available in respect of the amount by which the taxable income other than STCG falls short of Basic Exemption Limit.
2. No deduction under Chapter VI-A (80C to 80U).

On Short Term Capital Gains on Assets other than in (a) above

At normal slab rates

3. Minimum Alternate Tax payable by Companies – As a percentage of Book Profit

Type of companies	Domestic Company			Foreign Company
A.Y. 2020-21 & AY. 2021-22	Below ₹ 1 crore	₹ 1 crore to ₹ 10 crore	Above ₹ 10 crore	Below ₹ 1 crore	₹ 1 crore to ₹ 10 crore	Above ₹ 10 crore
Rate of Tax	15	15	15	15	15	15
Surcharge	–	7	12	–	2	5
Health & Education Cess	4	4	4	4	4	4
Effective Rate	15.6	16.692	17.472	15.6	15.912	16.38

Notes:

1. MAT Credit allowed to be carried forward for set off for 15 years.
2. Marginal relief available.
3. Rate of Tax will be 9% if the assessee is a unit located in an International Financial Services Centre and derives income in convertible foreign exchange.
4. The provisions of Section 115JB are not applicable to the company who has exercised the option referred to under Section 115BAA or 115BAB.

4. Alternate Minimum Tax (AMT) payable by Non-Corporate - As percentage of Adjusted Total Income

A.Y’s 2020-21 & 2021-22	Below ₹ 1 crore	Above ₹ 1 crore
Rate of Tax	18.5	18.5
Surcharge	–	12
Health & Education Cess	4	4
Effective Rate	19.24	21.5488

Notes:

1. AMT credit allowed to be carried forward for set off for 15 years
2. Marginal relief available.
3. Rate of Tax will be 9% if the assessee is a unit located in an International Financial Services Centre and derives income in convertible foreign exchange.
4. The provisions of Section 115JC are not applicable to the person who has exercised the option referred to under Section 115BAC or 115BAD.

5. Advance Tax

Assessment Years 2020-21 & 2021-22	Advance Tax Obligation (If tax payable exceeds ₹ 10,000)
Due Date of Installment payable on or before	Amt. Payable as a % of Tax (For all Assessee’s)
15th June	15%
15th September	30%
15th December	30%
15th March	Balance

No advance tax to be paid by senior citizen if he/she does not have income under head “Profit and Gains of Business or Profession”.

An eligible assessee engaged in a business referred in Section 44AD/44ADA is liable to pay advance tax in a single instalment on or before the 15th of March every financial year.

*MAT also subject to Advance Tax. Refer Circular No. 13 of 2001, [252 ITR (St) 52]

**AMT also subject to Advance tax.