Whether to continue with the old rate or opt for new rate: A Comparison Tax Rate chart

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Whether to continue with the old rate or opt for new rate: A Comparison Tax Rate chart

Taxpayer now need to do the cost profit analysis before opting for lower tax rate of 22% as Domestic company which wants to opt for tax @22% for the FY 2019-20 is not eligible for

  1. Set off of any brought forward loss due to additional depreciation. However, they can set off of the same subject to old tax @25% or revised 15% (if MAT applicable) on balance income, if any and can exercise option to for new tax @22% in the later years.
  2. Brought forward MAT credit. However, they can claim the same subject to old tax @25% or 15% if MAT applicable, on balance income, if any and can exercise option for new tax @22% after utilising the credit.

Time to check the old rate vs. new rate which are as under:

[New domestic manufacturing companies can opt for lower effective tax rate of 17.16% undisputedly. However, for other companies, one can refer below chart:

 Effective tax rates schedule for FY 2019-20 (AY 2020-21)

SI
No
Particulars Effective Tax Rate if
option for lower tax rate is
exercised
If lower tax rate option is not exercised & wants to set off B/F loss of additional depr or claim MAT credit
Effective Tax Rate Effective MAT rate
1. Turnover > Rs.400 Crore during the FY 2017-18 On balance income On book profit
·         Income < Rs.1 crore 25.17% 31.20% 15.6%
·         Income > Rs.1 crore <  Rs.10 crore 25.17% 33.38% 16.69%
·         Income > Rs. 10 crorc 25.17% 34.94% 17.17%
2 Other domestic companies

(in existence on or before 30-Sep- 2019)

·         Incomes < Rs.1 crore 25.17% 26% 15.6%
·         Income > Rs.1 core <
Rs.10 crore
25.17% 27.82% 16.69%
·         Income > Rs.10 core 25.17% 29.12% 17.47%

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