Income Tax Slabs & Rates : AY 2020-21 or FY 2019-20

INCOME TAX SLABS & RATES : A.Y 2020-21 [F.Y. 2019-20]
Individual resident (Aged below 60 years) or

• Any NRI or
• HUF or
• AOP or BOI or AJP

Senior Citizen (Aged 60 years or more but less than 80 years)

Very Senior Citizen (Aged 80 years or more)

• Rebate under Section 87A Rs 12,500 or 100% of income tax (whichever is lower) for individuals with income below Rs 5 Lakhs

• Co-operative Society

Firm

Local Authority

• Domestic Company (1) -

• Claiming Exemptions and
• Turnover in 2017-18 upto Rs. 400 crores

• Domestic Company (2) -

• Claiming Exemptions and
• Turnover in 2017-18 exceeding Rs. 400 crores

• Domestic Manufacturing Company (3) –

• NOT Claiming Exemptions
• U/s 155BAA

• Domestic Manufacturing Company (4) –

• NEW Company
• U/s 155BAB

Foreign Company

Marginal Relief on Surcharge

In case taxable income exceeds Rs. 50 lacs / Rs. 1 crore Surcharge is payable on income tax at applicable rates. If increase in 'Income Tax + Surcharge' is more than the increase income over Rs. 50 lacs / Rs. 1 crore, the 'Surcharge' is reduced by such amount so that the 'Income Tax + Surcharge' become equal to increase in 'Total Taxable Income' over Rs. 50 lacs / 1 Crore respectively. The amount so reduced from 'Surchage' is 'Marginal Relief on Surcharge'.

Section 115BAA – Lower tax rates introduced for Domestic Companies

A new section 115BAA has been inserted w.e.f. A.Y 2020-21 which provides option to a domestic company to pay tax at lower rate of 22% (including 10% surcharge and 4% cess) i.e. effective tax rate u/s 115BAA would be 25.168% provided the income is computed-

Without claiming exemption/ deduction

• u/s 10AA [SEZ units],
• u/s 32(1)(iia) [additional depreciation qua new plant and machinery @ 20%/ 30%],
• u/s 32AD [15% on new assets in undertaking set up in specified backward areas in Andhra Pradesh, Bihar, Telangana, and West Bengal]
• u/s 33AB [specified percentage of amounts deposited with Tea/ Coffee/ Rubber Board]
• u/s 33ABA [specified percentage of amounts deposited in Site Restoration Account]
• u/s 35(1)(ii)/(iia), 35(2AA) [specified deduction for scientific research]
• u/s 35AD [expenditure on specified business]
• u/s 35CCC [expenditure on agricultural extension project]
• u/s 35CCD [expenditure on skill development project]
• under Part C of Chapter VIA except section 80JJAA of the Act (such as 80IA/ IB/ IC/ ID/ IE etc.)

2. Without set-off of any brought forward losses to the extent such loss relates to deductions mentioned above. Such losses would also not be allowed to be carried forward to subsequent years.

3. After claiming depreciation other than additional depreciation u/s 32(1)(iia).

Benefit of lower rate under the aforesaid section can be exercised by the company from any year commencing from AY 2020-21 or onwards. Such option is to be exercised in prescribed manner, before due date of return u/s 139(1) for the year in which option is exercised. Option once exercised would be binding for subsequent years and cannot be withdrawn

Section 115BAB - Lower tax rates introduced for Domestic manufacturing companies

New section 115BAB has been inserted w.e.f. A.y 2020-21 which provides option to a domestic manufacturing company to pay tax at a lower rate of 15% (including 10% surcharge and 4% cess)

if such company is set-up and registered, 2019 on or after 1st October and commences manufacturing activity upto 31st March, 2023 .

• Akin to the provisions of section 115BAA, income for the purposes of the aforesaid preferential rate has to be computed without claiming exemptions / deductions, set-off of brought forward losses, as prescribed in that section and discussed above.

• Additionally, the following conditions must be fulfilled by the company to avail benefit of lower tax rate:

1. company must not be formed by splitting up, or the reconstruction of a business already in existence;
2. company must not use machinery or plant previously used for any purpose. Used plant and machinery to the extent of 20% of total value of plant and machinery is permissible;
3. company must not use building previously used as a hotel or a convention centre.

• Akin to provisions of section 115BAA, if company opts for lower rate of tax given under this section, it shall not be able to subsequently withdraw the option.

• Section 115JB – Reduced tax on book profit of companies not claiming benefit u/s 115BAA/ 115BAB

• Provisions of section 115JB have been amended to reduce the Minimum Alternate Tax (MAT) on book profit from 18.5% to 15% , w.e.f. assessment year 2020-21.
• Companies availing benefit of lower tax rate under new provisions of sections 115BAA/ 115BAB have been Exempted from MAT on book profit under section 115JB.