2. The rates of income tax are the same as those specified for AY 2020-21.
Comparative chart of tax rates as applicable to individual are as follows:
Total Income Proposed Existing
AY 21-22 AY 20-21
Up to INR 2.50 lac Nil Nil
Above INR 2.50 lac - INR 5 lac 5% 5%
Above INR 5 lac - INR 10 lac 20% 20%
Above INR 10 lac 30% 30%
Basic Exemption Limit
Age
Amount
(In Rs.)
>60 Age INR 3 Lac
>80 Age INR 5 lacs
• Rebate under section 87A to INR 12,500/- resulting in no tax for total incomes below INR 5 Lac
remain unaltered.
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3. Alternatively, on satisfaction of certain prescribed conditions, an individual or HUF
may opt to compute tax in respect of total income (without considering prescribed
exemptions/deductions), the proposed tax incentive scheme under Section
115BAC for individuals and HUFs, as per the following rates:
Total Income Tax Rates
Upto INR 2.50 lac NIL
Above INR 2.50 lac - INR 5 lac 5%
Above INR 5 lac - INR 7.5 lac 10%
Above INR 7.50 lac - INR 10 lac 15%
Above INR 10 lac - INR 12.5 lac 20%
Above INR 12.50 lac - INR 15 lac 25%
INR 15.01 and above 30%
Prescribed Conditions:
The option can be exercised for every physical year.
Option can exercised for a previous year will be valid for that physical year & all subsequent years.
The option can be withdrawn only once for a physical year after the year in which it was exercised.
Once opted-out, the person will be ineligible to opt the scheme ever again.
The option shall however be available if the business ceases to exist.
On failure to satisfaction of prescribed conditions, would make the option invalid, other provisions of
the Act would apply accordingly.
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4. Benefits of Exemptions and Deductions to be foregone:
House rent allowance under section 10(13A)
Leave travel concession under section 10(5)
Allowance exempt under section 10(14); except:
Transport Allowance
Conveyance Allowance
Allowance granted to meet the cost of travel on tour or on transfer
Daily allowance to meet the ordinary daily charges incurred by an employee on account of absence
from his normal place of duty.
Income by way of daily allowance or any allowance for MLAs etc.
Standard deduction against salary income.
Income of minor clubbed with the income of the parent under section 64(1A), deduction of INR 1,500/-
under section 10(32).
Deduction under section 57(ii a) i.e. 1/3rd of such income or INR 15,000 against family pension.
Deduction under Chapter VI-A- Other than section 80CCD(2) or section 80JJAA
Interest on money borrowed (that is deductible up to a maximum of INR 2 Lacs) in case of Self-occupied
house properties.
Additional depreciation in the case of persons engaged in the business of manufacture or production of
an article or thing or in the business of generation, transmission of electricity under section 32(1)(ii).
Accelerated depreciation at 15% under section 32AD of actual cost of new asset being plant or machinery
when undertaking /enterprise is engaged in manufacture or production of any article or thing in a notified
backward area.
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5. Benefits of Exemptions and Deductions to be foregone:
Deduction of amount of deposit or 40% of the profits (whichever is less) of the person
carrying on the business of growing /manufacturing tea/coffee/ rubber in India under
section 33AB.
Section 33ABA providing deduction for site restoration fund equal to the amount
deposited or 20% of the profits (whichever is less) of the person carrying on the
business consisting of prospecting for /extraction /production of petroleum or natural
gas or both in India.
Donations to National Laboratory /University/IIT deductible under section 35(2AA).
In the case of certain specified businesses listed in Section 35AD, the entire amount
of expenditure incurred towards plant and machinery that is deductible.
Deductible under Section 35CCC relating to agricultural extension project that is
allowable @150% of the expenditure incurred.
In the case of newly established undertaking in free trade zone, benefit of deduction
under section 10AA.
No exemption or deduction for allowance or perquisite by whatever name called. 5
6. Time limits for claiming benefit under the Section:
The provisions of section 115BAC will not apply unless the assessee has opted for the same.
The time limit for claiming the option are:
In the case of persons not having business income, the option could be furnished along with the return of
income furnished under section 139(1) for a previous year relevant to the assessment year.
In the case of person having business income, on or before the due date specified in section 139(1) for
furnishing the return of income for any previous year relevant to the assessment year
commencing on or after April 1, 2021 and such option once exercised shall apply to subsequent
assessment years also.
Restriction of Carry Forward and Set Off Benefits:
Loss under the head “Income from house property” cannot be set off against any other head
of income.
Depreciation brought forward from any earlier assessment year cannot be set off.
The depreciation of current year shall be deemed to have been given full effect. Therefore it is
not eligible for carry forward and set off in any subsequent assessment year.
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8. DDT (Dividend Distribution Tax)
FM proposed to remove the deeply unpopular dividend distribution tax
(DDT)
ESOP (Employee Stock Option Plan)
Government proposes deferment of tax payment by employees on
ESOPs from startups by 5 years
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9. Residential Status
•The Budget proposes to reduce the period of stay criteria for Indian citizens/PIO
visiting India to determine their residential status. They will now qualify as residents if
their stay in India is:
- more than 120 days (earlier limit was 182 days), and
- more than 365 days during the preceding four previous years.
Change in condition for qualifying as Not Ordinary Resident (NOR)
•Existing provisions provide two criteria for an individual to qualify as NOR. The
individual:
- is a non-resident in 9 out of 10 preceding years, or
- stays in India for 729 days or less in seven preceding years.
•The above provisions are proposed to be replaced with a new provision whereby an
individual will qualify as NOR if he/she has been a non-resident in India in 7 out of 10
preceding years. 9
