New slab rate for individuals for F.Y. 2020-21 (A.Y. 2021-22) – section 115BAC

The budget has been announced today and it brings good news for some tax payers but there are various things you need to take care before getting excited.

Let’s discuss the new slab rate for Individuals:

First time the tax rate for individuals has been mentioned in a section of income tax as compared to earlier method where it used to just mention it in Finance Bill.

A new section has been inserted for such slab rate i.e. section 115BAC after section 115BAB:

S. No	Total income	Rate of tax
1	Upto 2.5 lakh	Nil
2	From 2,50,001 to 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 12,50,000	20%
6	From Rs 12,50,001 to Rs 15,00,000	25%
7	Above Rs 15,00,000	30%

No exemption or deduction shall be provided under this sections/ clauses:

“clause (5) or clause (13A) or prescribed under clause (14) (other than those as may be prescribed for this purpose) or clause (17) or clause (32), of section 10 or section 10AA or section 16 or clause (b) of section 24 (in respect of the property referred to in sub-section (2) of section 23) or clause (iia) of sub-section (1) of section 32 or section 32AD or section 33AB or section 33ABA or sub-clause (ii) or sub-clause (iia) or sub-clause (iii), of sub-section (1) or sub-section (2AA), of section 35 or section 35AD or section 35CCC or clause (iia) of section 57 or under any of the provisions of Chapter VI-A other than the provisions of sub-section (2) of section 80CCD or section 80JJAA;”

It majorly covers:

• Travel concession to government employees. Section 10(5)
• House rent allowance 10(13A)
• Reimbursement of expense to employee in form of allowance for actual expense 10(14)
• Allowances to parliamentary members 10(17).
• Income to SEZ exempt u/s 10AA.
• Standard deduction from salary u/s 16.
• Deduction of interest from Self occupied House property u/s 24(b)
• Other deduction mentioned in section 32(1)(iia) additional depreciation, 32AD, 33AB, 33ABA, 35(1), 35(2AA), 35AD, 35CCC.
• One third deduction from family pension income u/s 57(iia).
• Deduction under Chapter VI-A i.e. 80C to 80U except 80CCD(2) (NPS) and 80JJAA.

No carry forward of loss or depreciation if same is related to sections mentioned above.

No set off of loss from Income from house property against any other income.

For people earning income from business this option once exercised shall apply to all subsequent years. It can only be withdrawn once and once its withdrawn you cannot exercise it again.

For others they can opt it or withdraw it every year.

In the speech it was mentioned that this will make tax structure simple and easy but now looking at the actual provisions, it feels that one will have to do more calculations and exercise to decide whether its beneficial or not as major exemptions are not allowed under this.

 

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