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An Overview of Concessional Tax Slab Rates (A.Y. 2021-22) CA Sahil Dhingra
||Rate of Income Tax
||From Rs 2,50,001 to Rs 5,00,000
||From Rs 5,00,001 to Rs 7,50,000
||From Rs 7,50,001 to Rs 10,00,000
||From Rs 10,00,001 to Rs 12,50,001
||From Rs 12,50,001 to Rs 15,00,000
||Above Rs 15,00,000
- 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).
- The following are the conditions to be satisfied for availing concessional rates of tax:
- 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):
||Leave travel concession
||House rent allowance
||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)
||Daily allowance or constituency allowance of MPs and MLAs
||Exemption in respect of income of minor child included in the income of parent
||Tax holiday for units established in SEZ
||(i)Standard deduction under the head “Salaries”
||Interest on loan in respect of self-occupied property
||Tea/Coffee/Rubber development account
||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)]
||Investment linked tax incentives for specified businesses
||Deduction in respect of expenditure incurred on notified agricultural project
||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).
- 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.
- 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%, wouldbe restricted to 40% on the written down value of such block of assets. Additional depreciation u/s 32(1)(iia), however, cannot be claimed.
- The concessional rate would be applicable only if option is exercised in the prescribed manner.
- 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 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.
- 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:
- 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
- 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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