R-2. Amendments at a glance

Transcription

1 R-2 Amendments at a glance Effected by the Finance ACT, 2018 $ Tax rates 0.11 Tax rates for the assessment years and are given in Referencer Income-tax - The following are the income-tax rates for the assessment years and a INDIVIDUAL, HUF, AOP, BOI - Exemption limit is 2,50,000 (it is applicable even in the case of a resident woman). Higher exemption limit is provided in the case of a senior citizen or super senior citizen. The slab rate of 5 per cent is applicable on net income up to 5,00,000; the slab rate of 20 per cent is applicable on net income between 5,00,000 and 10,00,000 and the slab rate of 30 per cent is applicable in respect of net income exceeding 10,00,000. Senior citizen - Senior citizen is a resident individual who is at least 60 years of age at any time during the previous year but of less than 80 years on the last day of previous year [assessment year (date of birth: on or after April 2, 1938 but before April 2, 1958) or assessment year (date of birth: on or after April 2, 1939 but before April 2, 1959)]. In the case of a senior citizen, exemption limit is 3,00,000. Net income in the range of 3,00,000 to 5,00,000 is taxable at the rate of 5 per cent. Between 5,00,000 and 10,00,000, the slab rate is 20 per cent and the income exceeding 10,00,000 is taxable at the rate of 30 per cent. These rates will be applicable only in the case of a resident (ordinarily or otherwise) senior citizen. In the case of a non-resident senior citizen, the exemption limit will be 2,50,000 as given below. Super senior citizen - A super senior citizen is a resident individual who is at least 80 years of age at any time during the previous year [assessment year (date of birth: before April 2, 1938) or assessment year (date of birth: before April 2, 1939)]. In the case of super senior citizen, first 5,00,000 of net income is exempt from tax. Net income in the range of 5,00,000 to 10,00,000 is taxable at the rate of 20 per cent. Net income exceeding 10,00,000 is taxable at the rate of 30 per cent. These rates will be applicable only in the case of a resident (ordinarily or otherwise) super senior citizen. In the case of a non-resident, the exemption limit will be 2,50,000 as given below. Any other individual, HUF, AOP, BOI - This category includes the following taxpayers 1. Any other resident individual [assessment year (date of birth: on or after April 2, 1958) or assessment year (date of birth: on or after April 2, 1959)]. 2. Any non-resident individual irrespective of age. 3. Any HUF, AOP, BOI, artificial juridical person. In case of any of these persons, first 2,50,000 of net income is exempt from tax. Net income in the range of 2,50,000 to 5,00,000 is taxable at the rate of 5 per cent. On net income between 5,00,000 and 10,00,000, the slab rate would be 20 per cent and income exceeding 10,00,000 will be taxable at the rate of 30 per cent b FIRM - There is no change in the tax rate. A partnership firm (including a limited liability partnership firm) is taxable at the rate of 30 per cent. $ For the Finance Act, 2018, log on to taxmann.com/readyreckoner.aspx. A resident individual (who has net income of 3,50,000 or less) is eligible for a rebate under section 87A. The rebate has been discussed in para

2 Para 0.11 Amendments at a glance c COMPANY - A domestic company is taxable at the rate of 30 per cent and a non-domestic company is taxable at the rate of 40 per cent. Different rates are, however, applicable in the following cases A domestic company (which satisfies the conditions of section 115BA) is taxable at the rate of 25 per cent from the assessment year onwards. For section 115BA, see para A domestic company (where its total turnover or gross receipt in the previous year does not exceed 50 crore) will be taxable at the rate of 25 per cent (not 30 per cent) for the assessment year A domestic company (where its total turnover or gross receipt in the previous year does not exceed 250 crore) will be taxable at the rate of 25 per cent (not 30 per cent) for the assessment year d CO-OPERATIVE SOCIETY AND LOCAL AUTHORITY - In the case of a co-operative society/local authority, there is no change in the income-tax rate Surcharge on income-tax - Applicable surcharge (as a percentage of income-tax) for the assessment years and is as follows If total income is in the range of 0 50 lakh 50 lakh - 1 crore 1 crore - 10 crore Above 10 crore - Individuals/HUF/AOP/BOI/ artificial juridical person Nil 10% 15% 15% - Firm/co-operative society/local authority Nil Nil 12% 12% - Domestic company Nil Nil 7% 12% - Foreign company Nil Nil 2% 5% Note - The above surcharge is subject to a marginal relief [see para ] Education cess/secondary and higher education cess/health and education cess on incometax - For the assessment year , education cess (EC) is 2 per cent of income-tax and surcharge and secondary and higher education cess (SHEC) is 1 per cent of income-tax and surcharge. For the assessment year , EC and SHEC will be replaced by health and education cess (HEC). HEC will be levied at the rate of 4 per cent of income-tax and surcharge Minimum alternate tax/alternate minimum tax - A corporate-assessee is covered by minimum alternate tax under section 115JB. A non-corporate assessee is covered by alternate minimum tax under section 115JC. Tax rate - Basic rate for minimum alternate tax/alternate minimum tax is 18.5 per cent for the assessment years and If a unit is located in an International Financial Services Centre and derives its income solely in convertible foreign exchange, the minimum alternate tax/alternate minimum tax is 9 per cent of book profit. However, the lower rate of 9 per cent is applicable in the case of a corporate-assessee from the assessment year and in the case of non-corporate assessee from the assessment year Surcharge - Surcharge on minimum alternate tax/alternate minimum tax is as follows Surcharge as a % of tax o Individual/HUF/AOP/BOI/artificial juridical person, if adjusted total income - does not exceed 50 lakh Nil - exceeds 50 lakh but does not exceed 1 crore 10% - exceeds 1 crore 15% o Co-operative society/firm/local authority, if adjusted total income - does not exceed 1 crore Nil - exceeds 1 crore 12% o Domestic company, if book profit - does not exceed 1 crore Nil - exceeds 1 crore but does not exceed 10 crore 7% - exceeds 10 crore 12% o Non-domestic company, if book profit - does not exceed 1 crore Nil - exceeds 1 crore but does not exceed 10 crore 2% - exceeds 10 crore 5% Note - The above surcharge is subject to a marginal relief [see para ]. International Financial Services Centre means an International Financial Services Centre which is set-up in a special economic zone and approved by the Central Government under section 18(1) of Special Economic Zone Act, 2005.

3 31 Tax rates Para 0.11 EC/SHEC/HEC - EC is 2 per cent of minimum alternate tax/alternate minimum tax and surcharge. SHEC is 1 per cent of minimum alternate tax/alternate minimum tax and surcharge. For the assessment year , EC and SHEC will be replaced by HEC. HEC will be levied at the rate of 4 per cent of minimum alternate tax/alternate minimum tax and surcharge Marginal relief - The provisions pertaining to marginal relief are given below Individual/HUF/AOP/artificial juridical person having income above 50 lakh - In the case of these taxpayers, if income is slightly higher than 50 lakh, a provision has been made to provide for relief in marginal cases. The said relief is as follows If the net income exceeds 50 lakh, the total amount payable as income-tax and surcharge on such income shall not exceed the total amount payable as income-tax on a net income of 50 lakh by more than the amount of income that exceeds 50 lakh. Individual/HUF/AOP/artificial juridical person having income above 1 crore - In the case of these taxpayers, if income is more than 1 crore, the applicable surcharge will increase from 10 per cent to 15 per cent. Consequently, another marginal relief is provided when net income is slightly higher than 1 crore which is as given below If net income of these taxpayers exceeds 1 crore, the total amount payable as income-tax and surcharge on such income shall not exceed the total amount payable as income-tax and surcharge on net income of 1 crore by more than the amount of income that exceeds 1 crore. Firms/co-operative societies/local authorities having income above 1 crore - To avoid hardship, in the case of these taxpayers (having income of above 1 crore), a provision has been made to provide for relief in marginal cases. The said relief is as follows If the net income exceeds 1 crore, the total amount payable as income-tax and surcharge on such income shall not exceed the total amount payable as income-tax on a net income of 1 crore by more than the amount of income that exceeds 1 crore. Domestic company/foreign company having income above 1 crore - In the case of a company, surcharge is not applicable if net income does not exceed 1 crore. If net income exceeds 1 crore, surcharge is applicable. To avoid hardship, in the case of a company whose income is slightly higher than 1 crore, a provision has been made to provide for relief in marginal cases. The said relief is as follows If the net income exceeds 1 crore, the total amount payable as income-tax and surcharge on such income shall not exceed the total amount payable as income-tax on a net income of 1 crore by more than the amount of income that exceeds 1 crore. Domestic company/foreign company having income above 10 crore - In the case of a corporate-assessee, if net income is more than 10 crore, the applicable surcharge will increase from 7 per cent to 12 per cent (in the case of foreign company, it increases from 2 per cent to 5 per cent). Consequently, another marginal relief is provided when net income is slightly higher than 10 crore which is as given below If the net income of a corporate-assessee exceeds 10 crore, the total amount payable as income-tax and surcharge on such income shall not exceed the total amount payable as income-tax and surcharge on net income of 10 crore by more than the amount of income that exceeds 10 crore. Income range when marginal relief is applicable - Marginal relief will be applicable in case net income falls in the following range Income range to attract marginal relief Page No. of tax tables AY AY Resident senior citizen 50 lakh lakh B-14 B-43 - Resident super senior citizen 50 lakh lakh B-14 B-43 - Any other resident individual, any non-resident B-43 individual, any HUF or AOP/BOI 50 lakh lakh B-14 - Resident senior citizen 100 lakh lakh B-16 B-45 - Resident super senior citizen 100 lakh lakh B-16 B-45 - Any other resident individual, any non-resident individual, any HUF or AOP/BOI 100 lakh lakh B-16 B-45

4 Para 0.11 Amendments at a glance 32 Income range to attract marginal relief Page No. of tax tables AY AY Firm 100 lakh lakh B-19 B-48 - Co-operative society 100 lakh lakh - Domestic company (tax rate : 25%) 100 lakh lakh B-22 B-51 - Domestic company (tax rate : 30%) 100 lakh lakh B-22 B-51 - Domestic company (tax rate : 25%) 1000 lakh lakh B-24 B-53 - Domestic company (tax rate : 30%) 1000 lakh lakh B-24 B-53 - Foreign company (tax rate : 40%) 100 lakh lakh - Foreign company (tax rate : 40%) 1000 lakh lakh Note : The above net income ranges will remain valid only if the assessee does not have any income which is chargeable to tax at special rate(s) of tax (e.g., long-term capital gains, short-term capital gains under section 111A, lottery income, etc.). In the case of alternate minimum tax/minimum alternate tax, the marginal relief will be applicable in case adjusted total income/book profit falls in the following range Income range - Individual/HUF/AOP/BOI/artificial juridical person 50 lakh lakh - Individual/HUF/AOP/BOI/artificial juridical person 100 lakh lakh - Co-operative society/firm/local authority 100 lakh lakh - Domestic company 100 lakh lakh - Domestic company 1000 lakh lakh - Foreign company 100 lakh lakh - Foreign company 1000 lakh lakh Maximum marginal tax rates - Maximum marginal tax rates (at highest level) for the assessment years and are given in the table below Assessment year Assessment year Individual/HUF/BOI/AOP/artificial juridical person % 35.88% Firm (including limited liability partnership) % % Co-operative society % % Domestic company 28.84%, % 29.12%, % Foreign company 43.26% 43.68% Maximum rate of dividend distribution tax under section 115-O is per cent (if dividend is distributed during April 1, 2018 and March 31, 2019) Rates for tax deduction/collection at source - During the financial year , tax will be deducted at source from salary at the rate given in para 0.1-1b. TDS rates for payments other than salary are given in para 0.6 of Referencer 1. TCS rates are given in para 0.7 of Referencer a SURCHARGE, EDUCATION CESS, ETC., IN THE CASE OF TDS/TCS - For the financial year , these rates are applicable as follows TDS/TCS Nature of payment Recipient/collectee Whether health and education 4% applicable Whether surcharge applicable TDS Salary Resident/non-resident Yes Yes Note 1 TDS Other than salary Resident No No TDS Other than salary Non-resident/foreign company Yes Yes Note 2 TCS Any Resident No No TCS Any Non-resident/foreign company Yes Yes Note 3 Notes 1. If amount subject to TDS exceeds 50 lakh but does not exceed 1 crore, surcharge is 10 per cent of TDS (if it exceeds 1 crore, surcharge is 15 per cent of TDS). 2. If the recipient is a non-resident (individual/huf/aop/artificial juridical person) and the payment/credit subject to TDS exceeds 50 lakh but does not exceed 1 crore, surcharge is 10 per cent of TDS (if it exceeds 1 crore, surcharge is 15 per cent of TDS). If the recipient is a non-resident (firm/co-operative

5 33 Tax rates Para 0.11 society) and the payment/credit subject to TDS exceeds 1 crore, surcharge is 12 per cent of TDS. If the recipient is a foreign company and the payment subject to TDS exceeds 1 crore but does not exceed 10 crore, surcharge is 2 per cent of TDS (it is 5 per cent of TDS if the payment/credit exceeds 10 crore). 3. If the purchaser/licensee/lessee is a non-resident (individual/huf/aop/artificial juridical person) and the amount subject to TCS exceeds 50 lakh but does not exceed 1 crore, surcharge is 10 per cent of TCS (it is 15 per cent of TCS if the amount subject to TCS exceeds 1 crore). If the purchaser/licensee/ lessee is a non-resident (firm/co-operative society) and the amount subject to TCS exceeds 1 crore, surcharge is 12 per cent of TCS. If the purchaser/licensee/lessee is a foreign company and the amount subject to TCS exceeds 1 crore but does not exceed 10 crore, surcharge is 2 per cent of TCS (it is 5 per cent of TCS if the amounts subject to TCS exceeds 10 crore) E1 X (40 years) is a resident individual. His net income for the assessment year is 51,95,000 (Situation 1), or 51,96,000 (Situation 2). Situation 1 Situation 2 Income-tax on net income 13,71,000 13,71,300 Add: 1,37,100 1,37,130 Income-tax and surcharge under normal computation (a) 15,08,100 15,08,430 Computation for marginal relief Step 1 - Income-tax on 50 lakh 13,12,500 13,12,500 Step % of income in excess of 50 lakh 1,95,000 1,96,000 Tax under marginal relief computation (b) 15,07,500 15,08,500 Normal tax or tax under marginal relief, whichever is lower [(a) or (b), whichever is lower] (c) 15,07,500 15,08,430 Add: Health and education 4% of (c) 60,300 60,337 Tax liability (rounded off) 15,67,800 15,68, E2 X (25 years) is a resident individual. His net income for the assessment year is 1,02,14,000 (Situation 1), or 1,02,15,000 (Situation 2). Situation 1 Situation 2 Income-tax on net income 28,76,700 28,77,000 Add: 4,31,505 4,31,550 Income-tax and surcharge under normal computation (a) 33,08,205 33,08,550 Computation for marginal relief Step 1 - Income-tax on 1 crore 28,12,500 28,12,500 Step 2 - Surcharge on 10% (if income is 1 crore) 2,81,250 2,81,250 Step % of income in excess of 1 crore 2,14,000 2,15,000 Tax under marginal relief computation (b) 33,07,750 33,08,750 Normal tax or tax under marginal relief, whichever is lower [(a) or (b), whichever is lower] (c) 33,07,750 33,08,550 Add: Health and education 4% of (c) 1,32,310 1,32,342 Tax liability (rounded off) 34,40,060 34,40, E3 Gross income of X (64 years), a resident individual, for the assessment year is 1,04,00,000 (salary : 8,00,000, lottery winnings : 80,00,000 and long-term capital gain under section 112 : 16,00,000). X is entitled to deduction of 1,50,000 under section 80C and 50,000 under section 80CCD(1B).