Disclaimer:

The contents of this document are for information purposes only. This aims to enable public to have a
quick and an easy access to information and do not purport to be legal documents.

Viewers are advised to verify the content from Government Acts/Rules/Notifications etc.

TAX RATES

In this part you can gain knowledge about the normal tax rates applicable to different taxpayers.
For special tax rates applicable to special incomes like long term capital gains, winnings from
lottery, etc. refer “Tax Rates” under “Tax Charts & Tables”.

Old Tax Regime for Individual & HUF:

The taxpayer has to exercise the option under section 115BAC(6) to avail the benefit of old tax
regime.

The normal tax rates applicable to a resident individual will depend on the age of the individual.
However, in case of a non-resident individual the tax rates will be same irrespective of his age.

For the purpose of ascertainment of the applicable tax slab, an individual can be classified as
follows:

 Resident individual below the age of 60 years.

 Resident individual of the age of 60 years or above at any time during the year but below
the age of 80 years.

 Resident individual of the age of 80 years or above at any time during the
year.

 Non-resident individual irrespective of the age.

Individuals
(Other than senior and super senior citizen)
Net Income Range Rate of Income-
tax
Assessment Year 2025- Assessment Year 2024-
26 25
Up to Rs. 2,50,000 - -
Rs. 2,50,000 to Rs. 5,00,000 5% 5%
Rs. 5,00,000 to Rs. 20% 20%
10,00,000
Above Rs. 10,00,000 30% 30%

[As amended by Finance (No. 2) Act, 2024]

 Senior Citizen
(who is 60 years or more at any time during the previous
year)
Net Income Range Rate of Income-
tax
Assessment Year 2025- Assessment Year 2024-
26 25
Up to Rs. 3,00,000 - -
Rs. 3,00,000 to Rs. 5,00,000 5% 5%
Rs. 5,00,000 to Rs. 20% 20%
10,00,000
Above Rs. 10,00,000 30% 30%
Super Senior Citizen
(who is 80 years or more at any time during the previous year)
Net Income Range Rate of Income-
tax
Assessment Year 2025- Assessment Year 2024-
26 25
Up to Rs. 5,00,000 - -
Rs. 5,00,000 to Rs. 20% 20%
10,00,000
Above Rs. 10,00,000 30% 30%
Hindu Undivided Family (Including AOP, BOI and Artificial Juridical Person)
Net Income Range Rate of Income-
tax
Assessment Year 2025- Assessment Year 2024-
26 25
Up to Rs. 2,50,000 - -
Rs. 2,50,000 to Rs. 5,00,000 5% 5%
Rs. 5,00,000 to Rs. 20% 20%
10,00,000
Above Rs. 10,00,000 30% 30%

Surcharge: Surcharge is levied on the amount of income-tax at following rates if total income of
an assessee exceeds specified limits:-
Rate of Surcharge
Assessment Year 2025-26 Assessment Year 2024-25
Range of Income Range of Income
Exceedi Exceedin
Rs. 50 Rs. 1 Rs. 2 ng Rs. Rs. 50 Rs. 1 Rs. 2 g Rs. 5
Lakhs to Crore Crores 5 Lakhs to Crore Crores to crore s
Rs. 1 toRs. 2 to Rs. 5 crore s Rs. 1 toRs. 2 Rs. 5
Crore Crores Crores Crore Crores Crores
10% 15% 25% 37% 10% 15% 25% 37%

[As amended by Finance (No. 2) Act, 2024]

 Note:

1) The enhanced surcharge of 25% & 37%, as the case may be, is not levied, from income
chargeable to tax under sections 111A, 112, 112A and 115AD. Hence, the maximum
rate of surcharge on tax payable on such incomes shall be 15%.

2) The maximum rate of surcharge on tax payable on dividend income shall be 15%.

3) The surcharge rate for AOP with all members as a company, shall be capped at 15%.

4) The surcharge rate is nil if the total income of a ‘specified fund’ as referred to section 10(4D)
includes any income in respect of securities as given under section 115AD(1)(a).

However, marginal relief is available from surcharge in following manner-

a) in case where net income exceeds Rs. 50 lakh but doesn’t exceed Rs. 1 Crore, the amount
payable as income tax and surcharge shall not exceed the total amount payable as income tax
on total income of Rs 50 Lakh by more than the amount of income that exceeds Rs 50 Lakhs.

b) in case where net income exceeds Rs. 1 crore but doesn’t exceed Rs. 2 crore, marginal relief
shall be available from surcharge in such a manner that the amount payable as income tax
and surcharge shall not exceed the total amount payable as income-tax on total income of Rs.
1 crore by more than the amount of income that exceeds Rs. 1 crore.

c) in case where net income exceeds Rs. 2 crore but doesn’t exceed Rs. 5 crore, marginal relief
shall be available from surcharge in such a manner that the amount payable as income tax
and surcharge shall not exceed the total amount payable as income-tax on total income of Rs.
2 crore by more than the amount of income that exceeds Rs. 2 crore.

d) in case where net income exceeds Rs. 5 crore, marginal relief shall be available from
surcharge in such a manner that the amount payable as income tax and surcharge shall not
exceed the total amount payable as income-tax on total income of Rs. 5 crore by more than
the amount of income that exceeds Rs. 5 crore.

Health and Education Cess : Health and Education Cess is levied at the rate of 4% on the
amount of income-tax plus surcharge.

Note: The Health and Education Cess is nil if the total income of a ‘specified fund’ as referred to
section 10(4D) includes any income in respect of securities as given under section 115AD(1)(a).

AMT : In the case of a non-corporate taxpayer to whom the provisions of Alternate Minimum
Tax (AMT) applies, tax payable cannot be less than 18.5% (+HEC) of "adjusted total income"
computed as per section 115JC. For provisions relating to AMT refer tutorial on “MAT/AMT” in
tutorial section.

[As amended by Finance (No. 2) Act, 2024]

Notes:

 In case of a unit located in an IFSC which derives its income solely in convertible foreign
exchange, the rate of AMT shall be at the rate of 9% instead of existing rate of 18.50%.

 The rate of AMT shall be 15% instead of existing rate of 18.5% in case of a co-operative
society.

Note: A resident individual (whose net income does not exceed Rs. 5,00,000) can avail rebate
under section 87A. It is deductible from income-tax before calculating education cess. The
amount of rebate is 100 per cent of income-tax or Rs. 12,500, whichever is less.

Non-resident individual/HUF

Net income range Income-tax rates Health and

Education Cess
Up to Rs. 2,50,000 Nil Nil

Rs. 2,50,000 – Rs. 5,00,000 5% of (total income minus 4% of income-tax

Rs. 2,50,000)
Rs. 5,00,000 – Rs. 10,00,000 Rs. 12,500 + 20% of (total income 4% of income-tax
minus Rs. 5,00,000)
Above Rs. 10,00,000 Rs. 1,12,500 + 30% of (total income 4% of income-tax
minus Rs. 10,00,000)

Surcharge: Surcharge is levied on the amount of income-tax at following rates if total income of
an assessee exceeds specified limits:-

Rate of
Surcharge
Assessment Year 2025-26 Assessment Year 2024-25
Range of Range of
Income Income
Exceedin Exceedin
Rs. 50 Rs. 1 Rs. 2 g Rs. 5 Rs. 50 Rs. 1 Rs. 2 g Rs. 5
Lakhs to Crore Crores crores Lakhs to Crore Crores crore s
Rs. 1 toRs. 2 to Rs. 5 Rs. 1 toRs. 2 to Rs. 5
Crore Crores Crores Crore Crores Crores

10% 15% 25% 37% 10% 15% 25% 37%

[As amended by Finance (No. 2) Act, 2024]

However, marginal relief is available from surcharge in following manner-

a) in case where net income exceeds Rs. 50 lakh but doesn’t exceed Rs. 1 Crore, the amount
payable as income tax and surcharge shall not exceed the total amount payable as income tax
on total income of Rs 50 Lakh by more than the amount of income that exceeds Rs 50 Lakhs.

b) in case where net income exceeds Rs. 1 crore but doesn’t exceed Rs. 2 crore, marginal relief
shall be available from surcharge in such a manner that the amount payable as income tax
and surcharge shall not exceed the total amount payable as income-tax on total income of Rs.
1 crore by more than the amount of income that exceeds Rs. 1 crore.

c) in case where net income exceeds Rs. 2 crore but doesn’t exceed Rs. 5 crore, marginal relief
shall be available from surcharge in such a manner that the amount payable as income tax
and surcharge shall not exceed the total amount payable as income-tax on total income of Rs.
2 crore by more than the amount of income that exceeds Rs. 2 crore.

d) in case where net income exceeds Rs. 5 crore, marginal relief shall be available from
surcharge in such a manner that the amount payable as income tax and surcharge shall not
exceed the total amount payable as income-tax on total income of Rs. 5 crore by more than
the amount of income that exceeds Rs. 5 crore.

Health and Education Cess: Health and Education Cess is levied at the rate of 4% on the
amount of income-tax plus surcharge.

AMT : In the case of a non-corporate taxpayer to whom the provisions of Alternate Minimum
Tax (AMT) applies, tax payable cannot be less than 18.5% (+HEC) of "adjusted total income"
computed as per section 115JC. For provisions relating to AMT refer tutorial on “MAT/AMT” in
tutorial section.

Notes:

 In case of a unit located in an IFSC which derives its income solely in convertible foreign
exchange, the rate of AMT shall be at the rate of 9% instead of existing rate of 18.50%.

 The rate of AMT shall be 15% instead of existing rate of 18.5% in case of a co-operative
society.

[As amended by Finance (No. 2) Act, 2024]

New tax regime Rate for Individual, HUFs, AOP, BOI and AJP

The new tax regime is the default tax regime for the Individual, HUF, Association of Persons
(AOP)/Body of Individuals (BOI) and Artificial Juridical Person (AJP). If one to opt-out from
default new tax regime, he has to exercise the option under section 115BAC(6).

The tax rates under the new tax regime are as under:

Assessment Year 2024-25 Assessment Year 2025-26

Net Income Range Tax rate Net Income Range Tax rate

Upto Rs. 3,00,000 Nil Upto Rs. 3,00,000 Nil

From Rs. 3,00,001 to Rs. 5% From Rs. 3,00,001 to Rs. 5%

6,00,000 7,00,000

From Rs. 6,00,001 to Rs. 10% From Rs. 7,00,001 to Rs. 10%
9,00,000 10,00,000

From Rs. 9,00,001 to Rs. 15% From Rs. 10,00,001 to Rs. 15%
12,00,000 12,00,000

From Rs. 12,00,001 to Rs. 20% From Rs. 12,00,001 to Rs. 20%
15,00,000 15,00,000

Above Rs. 15,00,000 30% Above Rs. 15,00,000 30%

Surcharge: Surcharge is levied on the amount of income-tax at following rates if total income of
an assessee exceeds specified limits:-

Range of
Income
Rs. 50 Lakhs to Rs. 1
Crore Rs. 1 Crore to Rs. Exceeding Rs. 2 crores
2 Crores
10% 15% 25%

Notes: The maximum rate of surcharge on tax payable on dividend income or capital gain referred
to in Section 111A, Section 112, Section 112A or Section 115AD shall be 15%.

[As amended by Finance (No. 2) Act, 2024]

However, marginal relief is available from surcharge in the following manner-

(a) in case where net income exceeds Rs. 50 lakh but doesn’t exceed Rs. 1 Crore, the amount
payable as income tax and surcharge shall not exceed the total amount payable as income tax
on total income of Rs 50 Lakh by more than the amount of income that exceeds Rs 50 Lakhs.

(b) in case where net income exceeds Rs. 1 crore but doesn’t exceed Rs. 2 crore, marginal relief
shall be available from surcharge in such a manner that the amount payable as income tax
and surcharge shall not exceed the total amount payable as income-tax on total income of Rs.
1 crore by more than the amount of income that exceeds Rs. 1 crore.

(c) in case where net income exceeds Rs. 2 crore, marginal relief shall be available from
surcharge in such a manner that the amount payable as income tax and surcharge shall not
exceed the total amount payable as income-tax on total income of Rs.2 crore by more than
the amount of income that exceeds Rs. 2 crore.

Health and Education Cess : Health and Education Cess is levied at the rate of 4% on the
amount of income-tax plus surcharge.

AMT :

The assessee opting for this scheme have been kept out of the purview of Alternate Minimum
Tax (AMT). Further the provision relating to the computation, carry forward and set off of AMT
credit shall not apply to these assessees.

Note:

(a) A maximum rebate of Rs. 25,000 is allowed under section 87A, If the total income of an
individual, who is opting for the new tax scheme under Section 115BAC(1A), is chargeable
to tax under section 115BAC(1A) and total income does not exceed Rs. 7,00,000. Further, if
the total income of the resident individual exceeds Rs. 7,00,000 and the tax payable on such
income exceeds the difference between the total income and Rs. 7,00,000, he can claim a
rebate with marginal relief to the extent of the difference between the tax payable on such
total income and the amount by which it exceeds Rs. 7,00,000

(b) If an assessee has opted for new tax regime, the provisions of AMT shall not be applicable.

Conditions to be satisfied:

The option to pay tax at lower rates shall be available only if the total income of assessee is
computed without claiming following exemptions or deductions:

a) Leave Travel concession [Section 10(5)]

b) House Rent Allowance [Section 10(13A)]

c) Official and personal allowances (other than those as may be prescribed) [Section10(14)]

d) Allowances to MPs/MLAs [Section 10(17)]

[As amended by Finance (No. 2) Act, 2024]

 e) Allowances for income of minor [Section 10(32)]

f) Deduction for units established in Special Economic Zones (SEZ) [Section 10AA];

g) Entertainment Allowance [Section 16((ii)]

h) Professional Tax [Section 16(iii)]

i) Interest on housing loan [Section 24(b)]

j) Additional depreciation in respect of new plant and machinery [Section 32(1)(iia)];

k) Deduction for investment in new plant and machinery in notified backward areas
[Section 32AD];

l) Deduction in respect of tea, coffee or rubber business [Section 33AB];

m) Deduction in respect of business consisting of prospecting or extraction or production

of petroleum or natural gas in India [Section 33ABA];

n) Deduction for donation made to approved scientific research association, university

college or other institutes for doing scientific research which may or may not be related
to business [Section 35(1)(ii)];

o) Deduction for payment made to an Indian company for doing scientific research
which may or may not be related to business [Section 35(1)(iia)];

p) Deduction for donation made to university, college, or other institution for doing research in
social science or statistical research [Section 35(1)(iii)];

q) Deduction for donation made for or expenditure on scientific research [Section35(2AA)];

r) Deduction in respect of capital expenditure incurred in respect of certain specified

businesses, i.e., cold chain facility, warehousing facility, etc. [Section 35AD];

s) Deduction for expenditure on agriculture extension project [Section 35CCC];

t) Deduction in respect of certain incomes other than specified under Section 80JJAA,
80CCD(2), 80CCH(2) and deduction under section 80LA for Unit located in IFSC [Part
C of Chapter VI-A].

Total income of the assessee is calculated after claiming depreciation under section 32, other than
additional depreciation, and without adjusting brought forward losses and depreciation from any
earlier year (if such loss or depreciation pertains to any deduction under the aforesaid sections).
Further, loss under the head house property can’t be set off against other heads of Income.
Moreover, such loss and depreciation will not be carried forward.

[As amended by Finance (No. 2) Act, 2024]

 If the assessee has any unabsorbed depreciation, relating to additional depreciation, which has not
been given full effect, the corresponding adjustment shall be made to WDV of the block of assets
in the prescribed manner

An assessee having income other than income from a business or profession can opt for the old tax
scheme every year. In other words, he has the option to opt out of the old tax scheme every year if
he has opted for it in the preceding year.

Where an assessee earning income from a business or profession has opted for the old tax scheme,
he can withdraw from the old tax scheme only once for a previous year other than the year in which
it was exercised. Once such an option has been exercised, the assessee shall never be eligible to
exercise such an option again, except where such person ceases to have any income from business
or profession.

Where a person has income from business or profession, he has to exercise the option for the old
tax scheme, in a prescribed manner, on or before the due date for furnishing the return of income
under Section 139(1). Whereas a person having income (other than income from business or
profession) has to exercise the option along with the return of income to be furnished under Section
139(1).

Normal tax rates applicable to a firm

A firm is taxed at a flat rate of 30%. Apart from tax @ 30%, Health and Education Cess is levied @ 4%
of income-tax.

Surcharge : Surcharge is levied @ 12% on the amount of income-tax where net income exceeds Rs. 1
crore. In a case where surcharge is levied, health and education cess of 4% will be levied on the amount
of income-tax plus surcharge.

The Health and Education Cess is nil if the total income of a ‘specified fund’ as referred to section
10(4D) includes any income in respect of securities as given under section 115AD(1)(a).

However, marginal relief is available from surcharge in such a manner that in the case of a person
having a net income of exceeding Rs. 1 crore, the amount payable as income tax and surcharge shall
not exceed the total amount payable as income-tax on total income of Rs. 1 crore by more than the
amount of income that exceeds Rs. 1 crore.

AMT : In the case of a non-corporate taxpayers to whom the provisions of Alternate Minimum Tax
(AMT) applies, tax payable cannot be less than 18.5% (+SC+HEC) of "adjusted total income"
computed as per section 115JC. For provisions relating to AMT refer tutorial on “MAT/AMT” in
tutorial section.

[As amended by Finance (No. 2) Act, 2024]

Normal Tax rates applicable to a domestic company

Income-tax rates applicable in case of domestic companies for assessment year 2024-25 and 2025-26
are as follows:

Domestic Company Assessment Year 2024-25 Assessment Year 2025-26

- Where its total turnover or gross
receipt during the previous year 25% NA
2021-22 does not
exceed Rs. 400 crore
- Where its total turnover or gross
receipt during the previous year NA 25%
2022-23 does not exceed Rs.
400 crore
- Any other domestic company 30% 30%

Surcharge : In addition to tax at above rate, surcharge is levied @ 7% on the amount of income-
tax if net income exceeds Rs. 1 crore but does not exceed Rs. 10 crore and @ 12% on the amount
of income-tax if net income exceeds Rs. 10 crore. In a case where surcharge is levied, health and
education cess of 4% will be levied on the amount of income-tax plus surcharge.

However, marginal relief is available from surcharge in such a manner that in the case of a
company whose net income exceeds Rs. 1 crore but does not exceed Rs. 10 crore, the amount
payable as income-tax and surcharge shall not exceed the total amount payable as income-tax on
total income of Rs. 1 crore by more than the amount of income that exceeds Rs. 1 crore.

In case of a domestic company whose net income exceeds Rs. 10 crore, marginal relief is
available from surcharge in such a manner that the amount payable as income-tax and surcharge
shall not exceed the total amount payable as income-tax and surcharge on total income of Rs. 10
crore by more than the amount of income that exceeds Rs. 10 crore.

Health and Education Cess: The amount of income-tax and the applicable surcharge, shall be
further increased by health and education cess calculated at the rate of four percent of such
income-tax and surcharge.

Note: The Health and Education Cess is nil if the total income of a ‘specified fund’ as referred to
section 10(4D) includes any income in respect of securities as given under section 115AD(1)(a).

MAT : In the case of a corporate taxpayer to whom the provisions of Minimum Alternate Tax
(MAT) applies, tax payable cannot be less than 15% (plus surcharge, if applicable and cess) of
"Book profit" computed as per section 115JB. However, MAT is levied at the rate of 9% (plus
surcharge, if applicable and cess) in case of a company, being a unit of an International Financial
Services Centre and deriving its income solely in convertible foreign exchange. For provisions
relating to MAT refer tutorial on “MAT/AMT” in tutorial section.

[As amended by Finance (No. 2) Act, 2024]

Special Tax rates applicable to a domestic company

The special Income-tax rates applicable in case of domestic companies for assessment year 2024-
25 and 2025-26 are as follows:
Domestic Company Assessment Year 2024-25 Assessment Year 2025-26

- Where it opted for Section 25% 25%

115BA
- Where it opted for Section 22% 22%
115BAA
- Where it opted for Section 15% 15%
115BAB

Surcharge : The rate of surcharge in case of a company opting for taxability under Section
115BAA or Section 115BAB shall be flat 10% irrespective of amount of total income.

Health and Education Cess: The amount of income-tax and the applicable surcharge, shall be
further increased by health and education cess calculated at the rate of four percent of such
income-tax and surcharge.

The Health and Education Cess is nil if the total income of a ‘specified fund’ as referred to
section 10(4D) includes any income in respect of securities as given under section 115AD(1)(a).

MAT : The domestic company who has opted for special taxation regime under section 115BAA
& 115BAB is exempted from provision of MAT. However, no exemption is available in case
where section 115BA has been opted.

Normal tax rates applicable to a foreign company

For Assessment Year 2024-25, A foreign company is taxed at a flat rate of 40%. Apart from tax
@ 40%, Health and Education Cess is levied @ 4% of income-tax.

For Assessment Year 2024-25, A foreign company is taxed at a flat rate of 35%. Apart from tax
@ 35%, Health and Education Cess is levied @ 4% of income-tax.

Surcharge : In addition to tax at above rate, surcharge is levied @ 2% on the amount of income-
tax if net income exceeds Rs. 1 crore but does not exceed Rs. 10 crore and @ 5% on the amount
of income-tax if net income exceeds Rs. 10 crore. In a case where surcharge is levied, health and
education cess of 4% will be levied on the amount of income-tax plus surcharge.

However, marginal relief is available from surcharge in such a manner that in the case of a
foreign company whose net income exceeds Rs. 1 crore but does not exceed Rs. 10 crore the
amount payable as income-tax and surcharge shall not exceed the total amount payable as
income-tax on total income of Rs. 1 crore by more than the amount of income that exceeds Rs. 1
crore.

[As amended by Finance (No. 2) Act, 2024]

In case of a foreign company whose net income exceeds Rs. 10 crore, marginal relief is available
from surcharge in such a manner that the amount payable as income-tax and surcharge shall not
exceed the total amount payable as income-tax and surcharge on total income of Rs. 10 crore by
more than the amount of income that exceeds Rs. 10 crore.

MAT : In the case of a corporate taxpayer to whom the provisions of Minimum Alternate Tax
(MAT) applies, tax payable cannot be less than 15% (plus surcharge, if applicable and cess) of
"Book profit" as per section 115JB. However, as per Explanation 4 to section 115JB as amended
by Finance Act, 2016 with retrospective effect from 1/4/2001, it is clarified that the MAT
provisions shall not be applicable and shall be deemed never to have been applicable to an
assessee, being a foreign company, if—

(i) the assessee is a resident of a country or a specified territory with which India has an
agreement referred to in sub-section (1) of section 90 or the Central Government has
adopted any agreement under sub-section (1) of section 90A and the assessee does not
have a permanent establishment in India in accordance with the provisions of such
agreement; or [As amended by Finance Act, 2016]

(ii) the assessee is a resident of a country with which India does not have an agreement of the
nature referred to in clause (i) and the assessee is not required to seek

registration under any law for the time being in force relating to companies. For provisions
relating to MAT refer tutorial on “MAT/AMT” in tutorial section.

Note: In case of a unit located in an IFSC which derives its income solely in convertible foreign
exchange, the rate of MAT shall be at the rate of 9% instead of existing rate of 15%.

Normal tax rates applicable to a Co-operative societies

Net income range Rate of income-tax

Up to Rs. 10,000 10%

Rs. 10,000 - Rs. 20,000 20%

Above Rs. 20,000 30%

Apart from tax at above rate, Health and Education Cess is levied @ 4% of income-tax.

Note: The Health and Education Cess is nil if the total income of a ‘specified fund’ as referred to
section 10(4D) includes any income in respect of securities as given under section 115AD(1)(a).
[For assessment year 2024-25]

Surcharge : Surcharge is levied @ 7% on the amount of income-tax if net income exceeds Rs. 1
crore but does not exceed Rs. 10 crore and @ 12% on the amount of income-tax if net income
exceeds Rs. 10 crore. In a case where surcharge is levied, health and education cess of 4% will be
levied on the amount of income-tax plus surcharge.

[As amended by Finance (No. 2) Act, 2024]

However, marginal relief is available from surcharge in such a manner that in the case of a person
having a net income exceeding Rs. 1 crore, the amount payable as income tax and surcharge shall
not exceed the total amount payable as income-tax on total income of Rs. 1 crore by more than
the amount of income that exceeds Rs. 1 crore.

Similarly, if the net income exceeds Rs. 10 crore, the amount payable as income-tax and
surcharge shall not exceed the total income payable as income-tax and surcharge on total income
of Rs. 10 crore by more than the amount of income that exceeds Rs. 10 crore.

AMT : In the case of a non-corporate taxpayer to whom the provisions of Alternate Minimum
Tax (AMT) applies, tax payable cannot be less than 15% (+SC+HEC) of "adjusted total income"
computed as per section 115JC. For provisions relating to AMT refer tutorial on “MAT/AMT” in
tutorial section.

In case of a unit located in an IFSC which derives its income solely in convertible foreign
exchange, the rate of AMT under section 115JC shall be at the rate of 9% instead of existing rate
of 15%.

Special tax rates applicable to a Co-operative societies

For Resident co-operative societies

The Finance Act, 2020 has inserted a new section 115BAD in Income-tax Act to provide an
option to the co-operative societies to get taxed at the rate of 22% plus 10% surcharge and 4%
cess. The resident co-operative societies have an option to opt for taxation under newly section
115BAD of the Act w.e.f. Assessment Year 2021-22. The option once exercised under this
section cannot be subsequently withdrawn for the same or any other previous year.

If the new regime of Section 115BAD is opted by a resident co-operative society, its income
shall be computed without providing for specified exemption, deduction or incentive available
under the Act. The societies opting for this section have been kept out of the purview of
Alternate Minimum Tax (AMT). Further, the provision relating to computation, carry forward
and set- off of AMT credit shall not apply to these assessees.

The option to pay tax at lower rates shall be available only if the total income of co-
operative society is computed without claiming following exemptions or deductions:

a) Deduction for units established in Special Economic Zones (SEZ) [Section 10AA];

b) Additional depreciation in respect of new plant and machinery [Section 32(1)(iia)];

c) Deduction for investment in new plant and machinery in notified backward areas
[Section 32AD];

d) Deduction in respect of tea, coffee or rubber business [Section 33AB];

[As amended by Finance (No. 2) Act, 2024]

e) Deduction in respect of business consisting of prospecting or extraction or production of
petroleum or natural gas in India [Section 33ABA];

f) Deduction for donation made to approved scientific research association, university

college or other institutes for doing scientific research which may or may not be related
to business [Section 35(1)(ii)];

g) Deduction for payment made to an Indian company for doing scientific research which
may or may not be related to business [Section 35(1)(iia)];

h) Deduction for donation made to university, college, or other institution for doing research in
social science or statistical research [Section 35(1)(iii)];

i) Deduction for donation made to National Laboratory or IITs, etc. for doing
scientific research which may or may not be related to business [Section 35(2AA)];

j) Deduction in respect of capital expenditure incurred in respect of certain specified

businesses, i.e., cold chain facility, warehousing facility, etc. [Section 35AD];

k) Deduction for expenditure on agriculture extension project [Section 35CCC];

l) Deduction in respect of certain incomes other than specified under Section 80JJAA [Part C
of Chapter VI-A].

Where a co-operative society exercises option for availing benefit of lower tax rate under section
115BAD, it shall not be allowed to claim set-off of any brought forward losses or depreciation
attributable to any restricted exemption or deduction in the Assessment Year for which the option
has been exercised and for any subsequent Assessment Year.

For new manufacturing resident co-operative Societies

The Finance Act, 2023 introduced a new tax scheme under section 115BAE for the resident co-
operative societies engaged in the manufacturing or production of an article or thing. This new
scheme will be applicable from the assessment year 2024-25. If a co-operative society opts for
this scheme, then income will be taxable at a concessional rate of 15%.

However, any income derived from non-manufacturing or production activities will be taxed at
the rate of 22%.

The option to pay tax at lower rates shall be available only if the total income of co- operative
society is computed without claiming following exemptions or deductions:

(a) Deduction for units established in Special Economic Zones (SEZ) [Section 10AA];

(b) Additional depreciation in respect of new plant and machinery [Section 32(1)(iia)];

(c) Deduction in respect of tea, coffee, or rubber business [Section 33AB];

[As amended by Finance (No. 2) Act, 2024]

(d) Deduction in respect of business consisting of prospecting or extraction or production of
petroleum or natural gas in India [Section 33ABA];

(e) Deduction for the donation made to an approved scientific research association, university,
college, or other institute for doing scientific research which may or may not be related to
business [Section 35(1)(ii)];

(f) Deduction for payment made to an Indian company for doing scientific research which may
or may not be related to business [Section 35(1)(iia)];

(g) Deduction for donation made to a university, college, or other institution for doing research
in social science or statistical research [Section 35(1)(iii)];

(h) Deduction for donations made to National Laboratory or IITs, etc., for doing scientific
research which may or may not be related to business [Section 35(2AA)];

(i) Deduction in respect of capital expenditure incurred in respect of certain specified

businesses, i.e., cold chain facility, warehousing facility, etc. [Section 35AD];

(j) Deduction for expenditure on agriculture extension project [Section 35CCC];

(k) Deduction under Chapter VI-A other than specified under Section 80JJAA.

Where a co-operative society exercises option for availing benefit of lower tax rate under section
115BAE, it shall not be allowed to claim set-off of any brought forward losses or depreciation
attributable to any restricted exemption or deduction in the Assessment Year for which the option
has been exercised and for any subsequent Assessment Year.

The tax calculated on the total income shall be further increased by the surcharge. The surcharge
shall be levied at the rate of 10% of tax on total income. Further, the amount of income tax and
the surcharge shall be increased by health and education cess calculated at the rate of 4% of such
income tax and surcharge.

From the assessment year 2024-25, the co-operative societies opting for the new tax scheme
under Section 115BAE have also been given an exemption from the payment of AMT.

The eligible co-operative society has to exercise the option in the prescribed manner on or before
the due date for furnishing the first return of income under Section 139(1) for any previous year
relevant to the assessment year commencing on or after 01-04-2024. Once such an option is
exercised, it shall apply to subsequent assessment years. The manner of exercising the option
shall be prescribed by the CBDT.

Further, Where it appears to the Assessing Officer that, owing to the close connection between
the co-operative society and any other person, or for any other reason, the course of business
between them is so arranged that the business transacted between them produces to the society
more than the ordinary profits, the Assessing Officer shall, in computing the profits and gains of
such society for the purposes of this section, take the amount of profits as may be reasonably
deemed to have been derived therefrom.

[As amended by Finance (No. 2) Act, 2024]

In case the aforesaid arrangement involves a specified domestic transaction, the amount of profits
from such transaction shall be determined having regard to arm’s length price as defined in
Section 92F.

The profits in excess of the amount of the profits determined by the Assessing Officer shall be
deemed to be the income of the co-operative society and charged to tax at the rate of 30%.

Normal tax rates applicable to local authorities

A local authority is taxed at a flat rate of 30%. Apart from tax @ 30%, Health and Education
Cess is levied @ 4% of income-tax and surcharge.

Surcharge : Surcharge is levied @ 12% on the amount of income-tax where net income exceeds
Rs. 1 crore. In a case where surcharge is levied, HEC of 4% will be levied on the amount of
income-tax plus surcharge.

However, marginal relief is available from surcharge in such a manner that in the case of a
person having net income exceeding Rs. 1 crore, the amount payable as income tax and
surcharge shall not exceed the total amount payable as income-tax on total income of Rs. 1 crore
by more than the amount of income that exceeds Rs. 1 crore.

AMT : In the case of a non-corporate taxpayer to whom the provisions of Alternate Minimum
Tax (AMT) applies, tax payable cannot be less than 18.5% (+SC+HEC) of "adjusted total
income" computed as per section 115JC. For provisions relating to AMT refer tutorial on
“MAT/AMT” in tutorial section.

In case of a unit located in an IFSC which derives its income solely in convertible foreign
exchange, the rate of AMT under section 115JC shall be at the rate of 9% instead of existing rate
of 18.50%.

[As amended by Finance (No. 2) Act, 2024]

 MCQ on tax rates

Q1. The normal tax rates applicable to a resident individual will depend on the _.

(a) Age of the individual (b) Gender of the individual

Correct answer : (a)

Q2. The basic exemption limit in case of a resident individual of the age of below 60 years is Rs.

(a) Rs. 2,00,000 (b) Rs. 2,50,000

(c) Rs. 3,00,000 (d) Rs. 5,00,000

Correct answer : (b)

Q3. The basic exemption limit in case of a resident individual of the age of 60 years or above but
below 80 years is Rs _.

(a) Rs. 2,00,000 (b) Rs. 2,50,000

(c) Rs. 3,00,000 (d) Rs. 5,00,000

Correct answer : (c)

Q4. The basic exemption limit in case of a resident individual of the age of 80 years or above is
Rs _.

(a) Rs. 2,00,000 (b) Rs. 2,50,000

(c) Rs. 3,00,000 (d) Rs. 5,00,000

Correct answer : (d)

Q5. The basic exemption limit in case of a non-resident individual irrespective of his age is Rs.

(a) Rs. 2,00,000 (b) Rs. 2,50,000

(c) Rs. 3,00,000 (d) Rs. 5,00,000

Correct answer : (b)

Q6. The basic exemption limit in case of a Hindu Undivided Family is Rs _.

(a) Rs. 2,00,000 (b) Rs. 2,50,000

[As amended by Finance (No. 2) Act, 2024]

(c) Rs. 3,00,000 (d) Rs. 5,00,000

Correct answer : (b)

Q7. In the case of an individual surcharge @ 37% is levied on the amount of income-tax if the
net income exceeds Rs.

(a) 10 lakhs (b) 1 crore

(c) 5 crore (d) 10 crore

Correct answer : (c)

Q8. A resident individual, opted for old tax regime, (whose net income does not exceed Rs.
5,00,000) can avail rebate under section 87A. It is deductible from income-tax before calculating
education cess. The amount of rebate is 100 per cent of income-tax or Rs , whichever is
less.

(a) 10,000 (b) 12,500

(c) 2,000 (d) 1,000

Correct answer : (b)

Q9. In the case of a non-corporate taxpayer who is subject to provisions of Alternate Minimum
Tax (AMT), tax payable by it cannot be less than % (+SC+Cess) of "adjusted total income"
computed as per section 115JC.

(a) 15 (b) 18

(c) 18.5 (d) 20

Correct answer : (c)

Q10. A resident individual, opted for new tax regime, (whose net income does not exceed Rs.
7,00,000) can avail rebate under section 87A. It is deductible from income-tax before calculating
education cess. The amount of rebate is 100 per cent of income-tax or Rs , whichever is
less.

(a) 10,000 (b) 12,500

(c) 2,000 (d) 25,000

Correct answer : (d)

[As amended by Finance (No. 2) Act, 2024]