Income Tax Services

Comprise taxation on income earned in a financial year a part of which is taxable as per rates prescribed for that year. With the financial year running from 1st April to 31st March of following year.

HEADS OF INCOME

Income is categorized under five broad heads/classes where the taxable component of income is ascertained as per the rules for particular head/class of income followed by aggregation for determining total taxable income. These include:

Salaries – Received against services rendered and include wages, pension, fees, commission and taxable value of perquisites.

Income from house properties that comprise income that arises from use of residential/commercial properties. Here, only two prescribed deductions are permitted while computing income.

Profits and Gains from Business/Profession that covers income earned from business/profession that is net of permissible deductions, against revenue earned.

Capital Gains that covers gains which arise from transfer of capital assets and the period of holding determining classification of asset, which then determines manner of taxation. The gains comprise short-term assets and long-term capital assets.

Income from Other Sources that are residuary head/class of income covering any income not specifically dealt with under other heads.

Tax Rates For Individuals and HUF For Financial Year 2019-20 (Assessment Year 2020-21) Is As Per Follows:

Income Range Very senior Citizen(who is 80 years or above at any time during previous year) (a) Senior Citizen(who is 60 years or above but below 80 years at any time during previous year) (b) General Category & non Resident Other than (a) & (b)
Upto Rs. 2,50,000 Nil Nil Nil
Rs. 2,50,001 to Rs. 3,00,000 Nil Nil 5%
Rs. 3,00,001 to Rs 5,00,000 Nil 5% 5%
Rs. 5,00,001 to Rs 10,00,000 20% 20% 20%
Above Rs. 10,00,000 30% 30% 30%

The interim budget 2019 has provisioned to provide a full tax rebate to individuals having a net taxable income (income adjusted after eligible tax deductions) up to Rs 5 lakhs. It means that the maximum tax rebate provided under section 87A has been increased from Rs. 2,500 to Rs. 12,500. Individuals having net taxable income up to Rs. 5lakhs can claim the tax rebate under 87A and thus effectively pay zero tax.

Surcharge: 10% of income tax, where total income exceeds Rs.50 lakh but up to Rs.1 crore and 15% of income tax, where the total income exceeds Rs.1 crore.

Health & Education Cess: Health & Education Cess is 4% of the total of Income Tax and Surcharge.

COMPANIES

Domestic Company - Turnover upto Rs. 50 crores

  • Income Tax: 25% of taxable income
    • Surcharge:
  • At the rate of 7% of such income tax, provided that the taxable income exceeds Rs. 1 crore.
  • At the rate of 12% of such income tax, provided that the taxable income exceeds Rs. 10 crores.
  • Education Cess: 4% of the total of Income Tax and Surcharge.

Domestic Company - Turnover exceeding Rs. 50 crores

  • Income Tax: 30% of taxable income
    • Surcharge:
  • At the rate of 7% of such income tax, provided that the taxable income exceeds Rs. 1 crore.
  • At the rate of 12% of such income tax, provided that the taxable income exceeds Rs. 10 crores.
  • Education Cess: 4% of the total of Income Tax and Surcharge

Firms Foreign Company

  • Income Tax: 40% of total income
    • Surcharge:
  • At the rate of 2% of such income tax, provided that the taxable income exceeds Rs. 1 crore
  • At the rate of 5% of such income tax, provided that the taxable income exceeds Rs. 10 crores
  • Education Cess: of 4% of total of Income-tax and surcharge

Kinds of Taxes

  • Annual Tax which is levied on income earned in a financial year and is based as per the rates declared in annual budget. With rates varying with each budget, the tax is payable in advance by way of quarterly installments during financial year.
  • Minimum Alternate Tax (MAT) is tax levied @ 18.5% of book profit. Here, the surcharge is at the rate of 7% of such income tax provided that the taxable income exceeds Rs. 1 crore and at the rate of 12% of such income tax, provided that the taxable income exceeds Rs. 10 crores Further, the Education Cess is @ 4% of total Income-tax and Surcharge.

Firm

  • Partnership Firms and LLPs (Limited Liability Partnerships) are to be taxed at the rate of 30%.
  • Surcharge: If income is greater than Rs.1,00,00,000 – 12% of income tax amount. Subject to marginal relief.Education Cess of 4% of total of Income-tax and surcharge.