In the Budget 2020 introduced a new Section 115 BAC for the F.Y.2020-21. This Section 115BAC have an option that you can stay in the Old Tax System along with all the Income Tax Exemptions as per the F.Y.2019-20 and you can Opt in the New Tax Regime Excluding any Exemptions of Income Tax as the previous F.Y. 2019-20 as clearly mentioned in the Budge 2020 U/s 115BAC.
As per the Budget, the New Tax Slab is given below U/s 115BAC which introduced in the Budget 2020.
Also it is clear that no relaxation to the Senior Citizen in the New Tax Slab as per U/s 115BAC ( New Tax Regime). We Prepared a Unique Income Tax Preparation Excel Based Software only for the West Bengal Govt Employees for the F.Y.2020-21 as per the new Budget 2020 with New and Old Tax Regime U/s 115BAC introduced in the Budget 2020.
Section 115BAC of the Income-tax Act, 1961 gives a concessional rate, however, it is dependent upon the condition that the all-out income will be figured without indicated exclusion or reasoning set off of misfortune and extra devaluation.
Be that as it may, there was an absence of lucidity with respect to whether the arrangements of section 115BAC of the Act are to be considered at the hour of deducting tax or not. A few concerns were gotten with respect to tax to be deducted at source (TDS), which brought up that the deductor, being a business, would not know whether the individual, being a representative, would settle on taxation under section 115BAC of the Act or not, as the option is required to be practised at the hour of recording of return.
Consequently, to the stay away from the disarray and difficulty in such cases, the Focal Leading body of Direct Taxes, in the activity of its forces under section 119 of the Act gave the accompanying explanations:
A representative, having income other than the income under the head “benefit and gains of business or calling” and aiming to select the concessional rate under section 115BAC of the Act, may suggest the deductor of such goal for each previous year.
• The deductor, being the business, will at that point register his all-out income and make TDS consequently as per the arrangements of section 115BAC of the Act.
• On the off the chance that the representative neglects to make such implication, the business will make TDS without thinking about the arrangement of section 115BAC of the Act.
Further, the implication made to the deductor by the representative will just be for the reasons for TDS during the previous year and can’t be adjusted during that year.
• In any case, the insinuation would not add up to practising the option as far as sub-section (5) of section 115BAC of the Act and the individual will be required to do as such alongside the arrival to be outfitted under sub-section (1) of section 139 of the Act for that previous year.
• Hence, option at the hour of documenting of return of income under sub-section (1) of section 139 of the Act could be not quite the same as the insinuation made by such worker to the business for that previous year.
If there should be an occurrence of an individual who has income under the head “benefit and gains of business or calling” additionally, the option for taxation under section 115BAC of the Act once practised for a previous year at the hour of documenting of return of income under sub-section (1) of section 139 of the Act can’t be changed for resulting previous years aside from in specific conditions.
The above explanation by the Focal Leading body of Direct Taxes would apply to such individual with an adjustment that the hint to the business for his situation for resulting previous years must not go amiss from the option under section 115BAC of the Act once practised in a previous year.
The provisions of Finance Bill, 2020(hereafter referred to as “the Bill”), relating to direct taxes seek to amend the Income-tax Act, 1961 (hereafter referred to as ‘the Act’), Prohibition of Benami Property Transactions Act, 1988 (hereafter referred to as “PBPTAct”), and Finance Act, 2013, to continue to provide momentum to the buoyancy in direct taxes through tax-incentives, reducing tax rates for co-operative society, individual and Hindu undivided family (HUF), deepening and widening of the tax base, removing difficulties faced by taxpayers, curbing tax abuse and enhancing the effectiveness, transparency and accountability of the tax administration.
With a view to achieving the above, the various proposals for amendments are organised under the following heads:—
(A) Rates of income-tax;
(B) Tax incentives;
(C) Removing difficulties faced by taxpayers;
(D) Measures to provide tax certainty;
(E) Widening and deepening of tax base;
(F) Revenue mobilisation measures;
(G) Improving the effectiveness of tax administration;
4. There are three kinds of deduction accessible under this section for contribution to the NPS Tier-I account. These are:
(I) Under section 80CCD(1): The deduction is accessible for the entire measure of employee’s or self contribution to the NPS account subject to the accompanying roof
(an) on account of an employee (both focal government and private area), 10& of his compensation of the earlier year,
(b) on account of an independently employed individual, 20% of his ‘Gross Total Income’.
(ii) Under section 80CCD(1B): An extra deduction, subject to a limit of Rs. 50,000 is accessible to a The individual on the off chance that he contributes any aggregate to the NPS Tier-I account in a budgetary year.
(iii) Under section 80CCD(2): An extra deduction under sub-section (2) is accessible for the business’ contribution to the NPS record of the employee. The deduction is constrained to:
(a) 14% of the compensation of the earlier year on account of a focal government employee,
(b) 10%of the compensation of the earlier year on account of some other employee.
The powerful Budget year 2020-21 (or the appraisal year 2021-22), there will be two tax regimes for individual income tax purposes.
1. One tax regime called as Old tax regime under which an individual can guarantee all the allowable deductions and exceptions in registering his all-out income and afterwards figures the tax payable according to the tax rates indicated in the important Finance Act. This regime is similar which is proceeded in FY 2019-20 or for AY 2020-21. This technique for calculation of income and tax is proceeded in AY 2021-22 and is named as ‘Old regime of tax’.
2. Another tax regime called a New tax regime under which an individual can pay income tax on his absolute income at a confessional or lower rate when contrasted with Old tax regime. In any case, in the new tax regime, the taxpayer needs to forego certain deductions and exclusions while processing the all-out income and afterwards registers the tax payable according to the tax rates determined in Section 115BAC of the Income Tax Act, 1961. This regime is recently presented from AY 2021-22 or FY 2020-21.
The new tax regime is discretionary for a taxpayer. At the end of the day, a taxpayer may choose the ‘old regime of tax’ or may settle on the ‘new regime of tax’. Anybody technique for tax regime might be picked by the individual or HUF according to his desire.
Under the new regime of tax, the tax rates are indicated in section 115BAC of the Income Tax Act, 1961.
Under section 115BAC(2)(i), the all out the income of an Individual and a HUF will be figured between Alia with no exclusion or deduction under any of the arrangements of Chapter VI-An other than the arrangements of sub-section (2) of section 80CCD or section 80JJAA.
Section 80JJA is applicable for an assessee having business income and consequently not talked about here.
Section 80CCD(2) as expressed above is identified with the deduction for the business’ contribution to the NPS record of the employee. As expressed above, deduction under section 80CCD(2) is an extra deduction under the old tax regime and it proceeds in the new tax regime.
On the face, it is giving the idea that one can get an extra tax deduction for the business’ contribution to the NPS record of the employee in the new tax regime. This is on the grounds that section 115BAC(2)(i) despite the fact that confines any deduction under part VI-A yet permits a deduction under section 80CCD(2) which is considered the business’ contribution to the NPS record of the employee.
Be that as it may, this isn’t the substantiates reality. This deduction has no extra tax advantage. This deduction is given also on the grounds that, under section 15, the business’ contribution to the NPS record of the employee is remembered for the all-out income of the employee as ‘Income from Salary’.
According to section 17(1)(viii), Salary incorporates the contribution made by the Central Government or some another boss in the earlier year, to the record of an employee under an annuity the plot alluded to in section 80CCD.
NPS Tier-1 is the told annuities conspire for section 80CCD.
Henceforth, in the principal the occasion, the whole measure of the business’ contribution to the NPS record of the employee is incorporated as ‘compensation income’ of the employee. From that point, a deduction under section 80CCD(2) is permitted to the accompanying degree
(a) 14 per cent of the compensation of the earlier year on account of a focal government employee,
(b) 10% of the compensation of the earlier year on account of some other employee.
On the off chance that the business’ contribution surpasses the measure of deduction the equivalent gets taxable.
Along these lines, the proportion of deduction open under section 80CCD(2) is from the beginning included as pay income in the total income of the employee. To keep up a vital good ways from taxation of the identical in the ownership of the employee, an additional the deduction is allowed from the total income under section 80CCD(2) and it is continued in the new tax regime.
In the event that the measure of a manager’s contribution is equivalent to the measure of deduction, at that point, there are no extra tax advantages to the employee. The position is the equivalent under the old tax regime just as the new tax regime. No extra deduction is permitted as such under the new tax regime.
The image looks ruddy just when section 115BAC is perused in disengagement. In the event that the equivalent is perused with section 17(1)(viii), at that point one will find that there is no ‘extra’ tax advantage under the new tax regime.
It must be recollected that section 115BAC(2) considers deduction under section 80CCD(2) as it were. The extra deduction of Rs. 50,000 for contribution to NPS account by the employee, which is as yet accessible under the old tax regime well beyond the restriction of Rs. 1,50,000, is secured under section 80CCD(1B). Henceforth, the deduction for the equivalent isn’t accessible under the new tax regime on the off chance that one picks to pay tax under section 115BAC.
The minister of finance remarked in Indian Budget 2020 that she had simplified the income tax structure. Unfortunately, this is far from the truth. What has happened is that the budget has given you another option to calculate your taxes. More options mean more complexity.
We have come up with an income tax calculator that incorporates both the existing system and the new tax system. You can fill in the details and find out which one works best for you
If you want to choose the new tax discipline, you will need to waive most of the tax exemptions and exemptions such as standard exemption, Chapter VI exemption, HRA benefits, LTA, home loan interest for self-occupied home etc.
In most cases, with the new tax system having tax breaks, the taxes will be higher
Did you get any development salary or arrears of salary? In the event that truly, you may be stressed over the tax ramifications of the equivalent. Do I need to pay taxes on the total amount? Shouldn’t something be said about the tax counts of the earlier year, etc? Taxpayers who have such inquiries in their brain here is all that you have to know.
At this point, you would have just made sense of that income tax is calculated on the total income of a taxpayer for a specific year. The income can either be as salary or family annuity or different wellsprings of income. In any case, there may be situations where you have gotten arrears of family benefits or pending salary during the current monetary year. It can happen that an income taxpayer gets a piece of his benefit or salary ahead of time or as arrears in any money related year, which builds his total income accordingly increment the payable taxes. In such a case, an application can be made and the surveying official can allow relief to the taxpayer. To summarize it, the Income Tax Act guarantees there is equality in the income tax chunk rates, and hence, when a bit of the income got doesn’t relate to the current year, a relief is conceded with the goal that the taxable income doesn’t increment.
To guarantee that you are not troubled with making good on extra taxes, the income tax office gives Relief U/s 89(1). In the event that you get any annuity or instalments for the earlier year, you won’t be taxed on the total amount for the current year. Basically getting you far from settling extra taxes, in light of the fact that there was a postponement in instalment.
To profit the advantages under Section 89(1) you would need to submit Form 10E. What is Form 10E would be the most evident inquiry. The subtleties of Form 10E, alongside how and for what reason to present the equivalent is given in detail underneath.
What is relief under section 89(1)?
At the point when the taxpayer gets:
1. Arrears of salary or
2. Advance salary or
3. Arrears of family annuity
At that point, such amount is taxable in the Financial Year in which it is gotten.
Be that as it may, relief under section 89(1) is given to diminish extra tax trouble because of deferral in getting such income.
1. Calculate tax payable on total income remembering arrears for the year in which it is gotten.
2. Calculate tax payable on total income barring arrears in the year in which it is gotten.
3. Calculate contrast somewhere in the range of (1) and (2).
4. Calculate tax payable on total income of the year to which arrears are connected, including arrears.
5. Calculate tax payable on total income of the year to which arrears are connected, barring arrears.
6. Calculate contrast somewhere in the range of (4) and (5).
7. The amount of relief will be the overabundance amount of (3) more than (6). No relief will be permitted if the amount of (6) is more than the amount in (3).
What is Form 10E?
For guaranteeing relief under section 89(1) for arrears of salary got, it is required to record Form 10E with the Income Tax division. In the event that Form 10E isn’t recorded and relief is guaranteed, at that point, the taxpayer is well on the way to get a notice from Income Tax office for not documenting Form10E.
In the Budget2020 introduced a new Section 115 BAC for the F.Y.2020-21. This Section 115BAC have an option that you can stay in the Old Tax System along with all the Income Tax Exemptions as per the F.Y.2019-20 and you can Opt-in the New TaxRegime Excluding any Exemptions of Income Tax as the previous F.Y. 2019-20 as clearly mentioned in the Budge 2020 U/s 115BAC.
As per the Budget the New Tax Slab is given below U/s 115BAC which introduced in the Budget 2020.
Also, it is clear that no relaxation to the Senior Citizen in the New Tax Slab as per U/s 115BAC ( New Tax Regime). We Prepared a Unique Income Tax Preparation Excel Based Software only for the West Bengal Govt Employees for the F.Y.2020-21 as per the new Budget 2020 with New and Old Tax Regime U/s 115BAC introduced in the Budget 2020.
In the Budget 2020 introduce a new Section 115 BAC for the F.Y.2020-21. This Section 115BAC have an option that you can stay in the Old Tax System along with all the Income Tax Exemptions as per the F.Y.2019-20 and you can Opt-in the New Tax Regime Excluding any Exemptions of Income Tax as the previous F.Y. 2019-20 as clearly mentioned in the Budge 2020 U/s 115BAC.
As per the Budget the New Tax Slab is given below U/s 115BAC which introduced in the Budget 2020.
Also, it is clear that no relaxation to the Senior Citizen in the New Tax Slab as per U/s 115BAC ( New Tax Regime).
The Finance Act 2020, has presented a new section 115BAC, according to this arrangement the assessee has an option whether to pay tax according to new chunk rates or the old piece rates. In the event that the assessee opts for the new tax system, at that point the assessee needs to renounce a portion of the tax concessions under the current income tax act.
How to opt for new or old plan under the Income Tax Act?
This arrangement is made appropriate for the Individual/HUF and the individual can practice the option at the hour of documenting the arrival of income. The people gaining under income pay and business can opt for the option under 115BAC as under:
1.Salaried individual (counting income from Pension, Bank Interest, Hosue Rent, Other Income)
In the event that the individual assessee is a salaried representative, at that point, he opt the plan on a yearly premise. It implies the individual can change to his preferred tax system in the following year. For opting the plan, the worker needs to offer announcement to the deductor of his goal to opt for old or new tax plot according to his decision. Upon such implication, the business will register his all-out income and make TDS subsequently as per the arrangement of section 115BAC of the demonstration. The announcement made by the worker can’t be changed. Anyway, at the hour of recording Returns, he can again pick once again.
•Business or Profession Income (benefit and Gains from Business or Profession)
On the off chance that the individual is winning business income, he can practice his option under section 115BAC at the hour of recording the arrival of income the option once practised can’t be pulled back in resulting evaluation year in regard of the assessee with Business Income. On the off chance that he choose to pull back, it would be permitted only a single time and he can never be picked again
Section115BAC is the newly inserted section in the Income Tax Act, 1961 that deals with the new income tax regime. This section and alternate tax regime was introduced in Union Budget 2020 and are applicable to individuals and Hindu Undivided Families (HUFs) only. A key feature of this new regime is that the income tax slab rates have been significantly reduced. However, the new rates come at the cost of various key income tax exemptions and deductions, which are currently available under the old (existing) income tax regime.
In AY 2021-22, individuals and HUFs will have the option to pay income tax as per the new (reduced) income tax slab rates provided their total income for the relevant FY satisfies the following conditions.
The declared income does not include any business income.
It is calculated without any exemptions or deductions provided under the following
Chapter VI-A except those u/s 80CCD/ 80JJAA,
Clause (5)/(13A)/(14)/(17)/(32) of Section 10/10AA/16,
Section 32(1)/ 32AD/ 33AB/ 33ABA,
Section 35/ 35AD/ 35CCC,
Clause (iia) of Section 57.
It is calculated without setting off losses from any earlier assessment year (AY) due to the above-mentioned deductions or from house property.
It is calculated without claiming any depreciation under clause (iia) of Section 32.
It is calculated without any exemption or deduction with respect to any allowances or perquisites.
Deductions and exemptions not allowed under Section 115BAC
The following table shows the major income tax deductions and exemptions that have been disallowed under the new income tax regime. Please note that the new regime is optional in FY 2020-21 and you may opt for the old (existing) regime, where all of the following deductions can be claimed.
Major Deductions under Chapter VIA (u/s 80C, 80CCC, 80CCD, 80DD, 80DDB, 80E, 80EE, 80EEA, 80G, 80IA, etc)
House Rent Allowance (HRA) u/s 10(13A)
Home Loan Interest u/s 24(b)
Leave Travel Allowance u/s 10(5)
Deduction for Donation or Expenditure on Scientific Research
Allowances u/s 10(14)
Deduction for Entertainment Allowance and Employment/Professional Tax u/s 16
The old (existing) tax regime allows for a variety of income tax deductions and exemptions and hence is suitable for most of the taxpayers. However, the new tax regime may prove beneficial to those who have not significantly invested in various tax-saving schemes, such as Employee Provident Fund (EPF), Equity Linked Savings Scheme (ELSS), Life Insurance, National Pension Scheme (NPS), National Savings Certificate (NSC), tax-saving Fixed Deposit (FD), etc. Moreover, the standard deduction of Rs. 50,000 for salaried individuals and HRA allowance also do not apply under the new tax regime.
Let us understand how the total tax payout is affected under the two regimes through the following table. We have considered an income tax deduction of Rs. 1.5 lakh u/s 80C, Rs. 25,000 u/s 80D and Rs. 50,000 as a standard deduction when computing tax using the existing income tax slab rates. Thus, the total deduction amounts to Rs. 2.25 lakh.
Difference Between the Total Tax Outgo(Old Regime – New Regime)
Under the Old Regime (Deduction of Rs. 2.25 lakh)
Under the New Regime (No deduction)
Under the Old Regime
Under the New Regime
*After applying income tax rebate up to Rs. 12,500 under Section 87A of Income Tax Act, 1961.
Thus, the new regime u/s 115 BAC may prove beneficial for the high-income group with minimal investment in tax-saving investments. However, the old (existing) regime may be better suited to the low-to-middle income group if they make sufficient investments in various tax-saving schemes. Hence, there is no set formula to decide between the two regimes. One must calculate the total tax outgo as per both the old and new slab rates before deciding whether to adopt Section 115BAC slab rates or not.