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New Slab Rates in Section 115BAC for AY 2021-22

Sahil Dhingra , Last updated: 19 April 2021  
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Concessional Tax Slab Rates (A.Y. 2021-22)

S.No.

Tax Slab

Rate of Income Tax

1

Upto Rs 2,50,000

NIL

2

From Rs 2,50,001 to Rs 5,00,000

5%

3

From Rs 5,00,001 to Rs 7,50,000

10%

4

From Rs 7,50,001 to Rs 10,00,000

15%

5

From Rs 10,00,001 to Rs 12,50,001

20%

6

From Rs 12,50,001 to Rs 15,00,000

25%

7

Above Rs 15,00,000

30%

New Slab Rates in Section 115BAC for AY 2021-22

1) As per Section 115BAC, Individuals or HUFs have an option to pay tax in respect of their total income (other than income chargeable to tax at special rates under Chapter XII such as section 111A, 112, 112A, 115BB etc.) at the following concessional rates, subject to certain conditions specified under section 115BAC(2).

2) The following are the conditions to be satisfied for availing concessional rates of tax:

(a) Section 115BAC(2) provides that while computing total income, the following deductions/exemptions would not be allowed if an Individual or HUF opts for concessional rates of taxes under section 115BAC(1):

Section

Exemption/Deduction

10(5)

Leave travel concession

10(13A)

House rent allowance

10(14)

Exemption in respect of special allowances or benefit to meet expenses relating to duties or personal expenses (other than those as may be prescribed for this purpose)

10(17)

Daily allowance or constituency allowance of MPs and MLAs

10(32)

Exemption in respect of income of minor child included in the income of parent

10AA

Tax holiday for units established in SEZ

16

(i) Standard deduction under the head 'Salaries'

(ii) Entertainment allowance

(iii) Professional tax

24(b)

Interest on loan in respect of self-occupied property

32(1)(iia)

Additional depreciation

33AB

Tea/Coffee/Rubber development account

33ABA

Site Restoration Fund

35(1)(ii),(iia),(iii) or 35(2AA

Deduction in respect of contribution to

- notified approved research association/ university/college/other institutions for scientific research [Section 35(1)(ii)]

- approved Indian company for scientific research [Section 35(1)(iia)]

- notified approved research association/ university/college/other institutions for research in social science or statistical research [Section 35(1)(iii)]

- An approved National laboratory/university/ IIT/ specified person for scientific research undertaken under an approved programme [Section 35(2AA)]

35AD

Investment-linked tax incentives for specified businesses

35CCC

Deduction in respect of expenditure incurred on notified agricultural project

57(iia)

Deduction in respect of family pension

80C to 80U

Deductions under Chapter VI-A (other than employers contribution towards NPS under section 80CCD(2) and deduction in respect of employment of new employees under section 80JJAA).

 

(b) Certain losses not allowed to be set-off: While computing total income, 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 (1) above; or
  • under the head house property with any other head of income; would not be allowed.

(c) Depreciation u/s 32 is to be determined in the prescribed manner. Depreciation in respect of any block of assets entitled to more than 40%, would be restricted to 40% on the written down value of such block of assets. Additional depreciation u/s 32(1)(iia), however, cannot be claimed.

3) The concessional rate would be applicable only if option is exercised in the prescribed manner.

(a) Where such individual or HUF has no business income, the option has to be exercised along with the return of income to be furnished under section 139(1) for a previous year relevant to the assessment year. In effect, such an Individual or HUF can choose whether or not to exercise the option in each previous year. He may choose to exercise the option in one year and not to exercise the option in another year.

 

(b) Where such individual or HUF has business income, the option has to be exercised on or before the due date specified under section 139(1) for furnishing the return of income for any previous year relevant to assessment year 2021-22 or any later assessment year and once such option is exercised, it would apply to subsequent assessment years.

The option can be withdrawn only once where it was exercised by the individual or HUF having business income for a previous year other than the year in which it was exercised. Thereafter, the individual or HUF shall never be eligible to exercise option under this section, except where such individual or HUF ceases to have any business income in which case, option under (i) above shall be available.

4) The following are the consequences for failure to satisfy the conditions mentioned above:

(a) In case of an individual or HUF having no income from business or profession:

On failure to satisfy the conditions mentioned in point no.(1), (2) and (3) of II above in any previous year, the option exercised would be invalid in respect of the assessment year relevant to that previous year. Consequently, the other provisions of the Income-tax Act, 1961 would apply as if the option had not been exercised for the assessment year relevant to that previous year

(b) In case of an individual or HUF having income from business or profession:

On failure to satisfy the conditions mentioned in point no.(1),(2) and (3) above in any previous year, the option exercised would be invalid in respect of the assessment year relevant to that previous year and subsequent assessment years.

Consequently, the other provisions of the Income-tax Act, 1961 would apply to the person as if the option had not been exercised for the assessment year relevant to that previous year and subsequent assessment years.


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Sahil Dhingra
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Category Income Tax   Report

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