New Tax Rates for A.Y. 2011-12

CA AYUSH AGRAWAL (Kolkata-Pune-Mumbai) (26986 Points)

01 April 2010

Tax rate applicable for A.Y. 2011-12 on Income, Dividend, Wealth, MAT, STT, Capital Gain and Presumptive Income

These rates are subject to enactment of the Finance Bill 2010. The rates are for the Financial Year 2010-11.

1. Income Tax Rates

1.1 For Individuals, Hindu Undivided Families, Association of Persons and Body of Individuals

(a) In the case of a resident woman below the age of 65 years, the basic exemption limit is INR 190,000

(b) In the case of a resident individual of the age of 65 years or above, the basic exemption limit is INR 240,000

(d) Education cess is applicable @ 3 percent on income-tax

Tax Slab For Individuals, Hindu Undivided Families, Association of Persons and Body of Individuals are as follows:-

Total Income	Tax Rates
Up to INR 160,000 (a)(b)	NIL
INR 160,001 to INR 500,000	10%
INR 500,001 to INR 800,000	20%
INR 800,001 and above^(c)	30%

1.2 For Co-operative Societies

Total Income	Tax rates
Up to INR 10,000	10%
INR 10,001 to INR 20,000	20%
INR 20,001 and above	30%

On the above, surcharge is not applicable. Education cess is applicable @ 3 percent on income-tax.

1.3 For Local Authorities

Local Authorities are taxable @ 30 percent. Surcharge is not applicable. Education cess is applicable @ 3 percent on income-tax.

1.4 For Firms [(including Limited Liability Partnership (LLP)]

· Firms (including LLP) are taxable @ 30 percent

· Surcharge is not applicable

· Education cess is applicable @ 3 percent on income-tax.

1.5 For Domestic Companies

· Domestic companies are taxable @ 30 percent

· Special method for computation of total income of insurance companies. The rate of tax on profits from life insurance business is 12.5 percent

· Surcharge is applicable @ 7.5 percent if total income is in excess of INR 10,000,000. Marginal relief may be available

· Education cess is applicable @ 3 percent on income-tax (inclusive of surcharge, if any).

1.6 For Foreign Companies

· Foreign companies are taxable @ 40 percent

· Surcharge is applicable @ 2.5 percent if total income is in excess of INR 10,000,000.Marginal relief may be available

· Education cess is applicable @ 3 percent on income-tax (inclusive of surcharge, if any).

2. Minimum Alternate Tax

· Minimum Alternate Tax (MAT) is levied @ 18 percent of the adjusted book profits in the case of those companies where income-tax payable on the taxable income according to the normal provisions of the Income-tax Act, 1961 (the Act), is less than 18 percent of the adjusted book profits.

· MAT credit is available for 10 years

· Surcharge is applicable @ 7.5 percent in the case of domestic companies if the adjusted book profits are in excess of INR 10,000,000. Marginal relief may be available

· Education cess is applicable @ 3 percent on income-tax (inclusive of surcharge, if any).

3. Securities Transaction Tax

Securities Transaction Tax (STT) is levied on the value of taxable securities transactions as under:

Transaction	Rates	Payable By
Purchase/Sale of equity shares, units of equity oriented mutual fund (delivery based)	0.125%	Purchaser / Seller
Sale of equity shares, units of equity oriented mutual fund (non –delivery based)	0.025%	Seller
Sale of an option in securities	0.017%	Seller
Sale of an option in securities, where option is exercised	0.125%	Purchaser
Sale of a futures in securities	0.017%	Seller
Sale of unit of an equity oriented fund to the Mutual Fund	0.25%	Seller

4. Wealth Tax

Wealth tax is imposed @ 1 percent on the value of specified assets held by the taxpayer on the valuation date (31 March) in excess of the basic exemption of INR 3,000,000.

5. Dividend Distribution Tax

· Dividend distributed by an Indian Company is exempt from income-tax in the hands of many shareholders. The Indian Company is liable to pay Dividend Distribution Tax (DDT) @ 16.609 percent (i.e. inclusive of surcharge and education cess) on such dividends

· The amount of dividend declared by the parent company (i.e. holding more than 50 percent of capital) is likely to be reduced by the amount of dividend received from its subsidiary company for the purposes of computing DDT payable by the parent company if:

- such dividend is received from its subsidiary

- the subsidiary has paid DDT on such dividend; and

- the parent company is not a subsidiary of any other company

Further, dividend paid to any person for and on behalf of New Pension System Trust is likely to be reduced.

· Income received by unit holders from a Mutual Fund is exempt from income-tax. The Mutual Fund (other than equity oriented mutual fund) is likely to pay income distribution tax of:

- 27.681 percent (inclusive of surcharge and education cess) on income distributed by a money market mutual fund or a liquid fund

- 13.841 percent (inclusive of surcharge and education cess) on income distributed to any person being an individual or a Hindu Undivided Family by a fund other than a money market mutual fund or a liquid fund; and

- 22.145 percent (inclusive of surcharge and education cess) on income distributed to any other person by a fund other than a money market mutual fund or a liquid fund.

6. Special rates for non-residents

(1) The following incomes in the case of non-resident are taxed at special rates on gross basis:

Nature of Income	Rate(a)
Dividend(b)	20%
Interest received on loans given in foreign currency to Indian concern or Government of India	20%
Income received in respect of units purchased in foreign currency of specified Mutual Funds / UTI	20%
Royalty or fees for technical services	For Agreements entered into: - After 31 May 1997 but before 1 June 2005 – @ 20% - After 1 June 2005 – @ 10%
Interest on FCCB, FCEB / Dividend on GDRs(b)	10%

(a) These rates may further increase by surcharge and education cess

(b) Other than dividends on which DDT has been paid

(c) In case the non-resident has a Permanent Establishment (PE) in India and the royalty/fees for technical services paid is effectively connected with such PE, the same could be taxed @ 40 percent (plus surcharge and education cess) on net basis

(2) Tax on non-resident sportsmen or sports association on specified income @ 10 percent plus applicable surcharge and education cess.

7. Capital Gains

Particulars	Short-term capital gains tax rates^(a)	Long-term capital gains tax rates(a)
Sale transactions of equity shares / unit of an equity oriented fund which attract STT	15%	Nil
Sale transaction other than mentioned above:
Individuals (resident and non-residents)	Progressive slab rates	20% / 10%(b)
Firms including LLP (resident and non-resident)	30%
Resident Companies	30%
Overseas financial organisations specified in section 115AB	40% (corporate) 30% (no corporate)	10%
FIIs	30%	10%
Other Foreign Companies	40%	20% / 10%
Local authority	30%	20% / 10%(b)
Co-operative Society	Progressive slab rates	20% / 10%(b)

(a) These rates may further increase by applicable surcharge and education cess.

(b) 20 percent with indexation and 10 percent without indexation (for units/ zero coupon bonds)

8. Presumptive Taxation

(1) In the case of a non-resident taxpayer

Business	Rate at which income is presumed
Shipping(b)	7.5% of gross receipts
Exploration of mineral oil (b)(c)	10% of gross receipts
Operations of Aircraft (b)	5% of gross receipts
Turnkey power projects (b)(c)	10% of gross receipts

(2) All resident taxpayers

Business

Rate at which income is

presumed

(i) Small Business

[excluding (ii)](a)(b)(c)(d)

8% of gross turnover/receipts

(ii) Plying, leasing or hiring of trucks (person should not

own over 10 goods carriage at any time during the previous year)(b)(c)

INR 5,000 per month/ part of month for each heavy goods vehicle.

INR 4,500 per month/ part of month for each light goods vehicle.

(a) The gross receipts of the taxpayer do not exceed INR 6,000,000

(b) All deductions/expenses (including depreciation) shall be deemed to have been allowed

(c) The taxpayer can claim lower profits, if he keeps and maintains specified books of accounts and obtains a tax audit report

(d) Applicable to Individuals, Hindu Undivided Families and Firm – excludes LLP, tax payer availing deduction under Section 10A, Section 10AA, Section 10B, Section 10BA or Chapter VI-A(C) of the Act.

(3) Special code of tonnage tax on income earned by domestic shipping companies.

Personal Tax Scenarios

Individual	Income Level
	500,000			1,000,000			1,500,000
Current Tax	55,620			210,120			364,620
Proposed Tax	35,020			158,620			313,120
Effective Tax Savings	20,600			51,500			51,500
Effective Tax Savings (%)	37			25			14

Resident women below 65 years	Income Level
	500,000		1,000,000			1,500,000
Current Tax	52,530		207,030			361,530
Proposed Tax	31,930		155,530			310,030
Effective Tax Savings	20,600		51,500			51,500
Effective Tax Savings (%)	39		25			14

Resident senior citizen	Income Level
	500,000	1,000,000			1,500,000
Current Tax	47,380	201,880			356,380
Proposed Tax	26,780	150,380			304,880
Effective Tax Savings	20,600	51,500			51,500
Effective Tax Savings (%)	43	26			14