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Budget 2011 - New Income Tax Rates FY 2011-12 (AY 2012-13) PDF Print E-mail
Income Tax

New Income Tax Rates -

In respect of income of all categories of assessees liable to tax for the assessment year 2011-12, the
rates of income-tax have been specified in Part I of the First Schedule to the Bill. These are the same as those laid down in Part III of the First Schedule to the Finance Act, 2010, for the purposes of
computation of “advance tax”, deduction of tax at source from “Salaries” and charging of tax payable
in certain cases.
(1) Surcharge on income-tax—
Surcharge shall be levied in respect of income liable to tax for the assessment year 2011-12, in the
following cases:—

(a) in the case of a domestic company having total income exceeding one crore rupees, the amount of
income-tax computed shall be increased by a surcharge for the purposes of the Union calculated at
the rate of seven and one-half per cent of such income-tax.

(b) in the case of a company, other than a domestic company, having total income exceeding one
crore rupees, the amount of income-tax computed shall be increased by a surcharge for the purposes
of the Union calculated at the rate of two and one-half per cent. of such income-tax.

(2) Education Cess —
For assessment year 2011-12, additional surcharge called the “Education Cess on income-tax” and
“Secondary and Higher Education Cess on income-tax” shall continue to be levied at the rate of two
per cent. and one per cent., respectively, on the amount of tax computed, inclusive of surcharge, in all
cases. No marginal relief shall be available in respect of such Cess.

II. Rates for deduction of income-tax at source during the financial year 2011-12 from certain
incomes other than “Salaries”

(1) Surcharge—
The amount of tax so deducted, in the case of a company other than a domestic company, shall be
increased by a surcharge at the rate of two per cent. of such tax, where the income or the aggregate of
such incomes paid or likely to be paid and subject to the deduction exceeds one crore rupees.
No surcharge will be levied on deductions in other cases.

(2) Education Cess—
“Education Cess on income-tax” and “Secondary and Higher Education Cess on income-tax” shall
continue to be levied at the rate of two per cent. and one per cent. respectively , of income-tax
including surcharge wherever applicable, in the cases of persons not resident in India including
companies other than domestic company.

III. Rates for deduction of income-tax at source from “Salaries”, computation of “advance tax”
and charging of income- tax in special cases during the financial year 2011-12
The rates for deduction of income-tax at source from “Salaries” during the financial year 2011-12 and
also for computation of “advance tax” payable during the said year in the case of all categories of
assessees have been specified in Part III of the First Schedule to the Bill.

These rates are also applicable for charging income-tax during the financial year 2011-12 on current
incomes in cases where accelerated assessments have to be made, for instance, provisional
assessment of shipping profits arising in India to non-residents, assessment of persons leaving India
for good during the financial year, assessment of persons who are likely to transfer property to avoid
tax, assessment of bodies formed for a short duration, etc.
The salient features of the rates specified in the said Part III are indicated in the following
paragraphs—

A. Individual, Hindu undivided family, association of persons, body of individuals, artificial
juridical person
Paragraph A of Part-III of First Schedule to the Bill provides following rates of income-tax:-
(i) The rates of income-tax in the case of every individual (other than those mentioned in (ii), (iii) and
(iv) below) or Hindu undivided family or every association of persons or body of individuals,
whether incorporated or not, or every artificial juridical person referred to in sub-clause (vii) of
clause (31) of section 2 of the Income-tax Act (not being a case to which any other Paragraph of Part
III applies) are as under :—
Upto Rs. 1,80,000 Nil.
Rs. 1,80,001 to Rs. 5,00,000 10 per cent.
Rs. 5,00,001 to Rs. 8,00,000 20 per cent.
Above Rs. 8,00,000 30 per cent.

(ii) In the case of every individual, being a woman resident in India, and below the age of sixty years
at any time during the previous year,—
Upto Rs. 1,90,000 Nil.
Rs. 1,90,001 to Rs. 5,00,000 10 per cent.
Rs.5,00,001 to Rs. 8,00,000 20 per cent.
Above Rs. 8,00,000 30 per cent.

(iii) In the case of every individual, being a resident in India, who is of the age of sixty years or more
but less than eighty years at any time during the previous year,—
Upto Rs. 2,50,000 Nil.
Rs. 2,50,001 to Rs. 5,00,000 10 per cent.
Rs. 5,00,001 to Rs.8,00,000 20 per cent.
Above Rs. 8,00,000 30 per cent.

(iv) in the case of every individual, being a resident in India, who is of the age of eighty years or more
at anytime during the previous year, -
Upto Rs. 5,00,000 Nil.
Rs. 50,00,001 to Rs. 8,00,000 20 per cent.
Above Rs. 8,00,000 30 per cent.

No surcharge will be levied in the cases of persons covered under paragraph-A of part-III of the First
Schedule.

B. Co-operative Societies
In the case of co-operative societies, the rates of income-tax have been specified in Paragraph B of
Part III of the First Schedule to the Bill. These rates will continue to be the same as those specified
for assessment year 2011-12. No surcharge will be levied .

C. Firms
In the case of firms, the rate of income-tax has been specified in Paragraph C of Part III of the
First Schedule to the Bill. This rate will continue to be the same as that specified for assessment year
2011-12. No surcharge will be levied .

D. Local authorities
The rate of income-tax in the case of every local authority is specified in Paragraph D of Part
III of the First Schedule to the Bill. This rate will continue to be the same as that specified for the
assessment year 2011-12. No surcharge will be levied.

E. Companies
The rates of income-tax in the case of companies are specified in Paragraph E of Part III of
the First Schedule to the Bill. These rates are the same as those specified for the assessment year
2011-12.

The existing surcharge of seven and one-half per cent. on a domestic company is proposed to
be reduced to five per cent. In case of companies other than domestic companies, the existing
surcharge of two and one-half per cent. is proposed to be reduced to two per cent.

However, the total amount payable as income-tax and surcharge on total income exceeding
one crore rupees shall not exceed the total amount payable as income-tax on a total income of one
crore rupees by more than the amount of income that exceeds one crore rupees.
The existing surcharge of seven and one-half per cent. in all other cases (including sections
115JB, 115-O, 115R, etc.) is proposed to be reduced to five per cent.

For financial year 2011-12, additional surcharge called the “Education Cess on income-tax”
and “Secondary and Higher Education Cess on income-tax” shall continue to be levied at the rate of
two per cent. and one per cent. respectively, on the amount of tax computed, inclusive of surcharge,
in all cases. No marginal relief shall be available in respect of such Cess.

Minimum Alternate Tax
Under the existing provisions of section 115JB(1), a company is required to pay a minimum alternate
tax (MAT) on its book profit, if the income-tax payable on the total income, as computed under the
Act in respect of any previous year relevant to the assessment year commencing on or after 1st April,
2011, is less than the MAT. The amount of tax paid under the said section is allowed to be carried
forward and set off against tax payable up to the tenth assessment year immediately succeeding the
assessment year in which the tax credit becomes allowable under the provisions of section 115JAA.

It is proposed to amend this section to increase the rate of MAT to eighteen and one-half per cent.
from the existing rate of eighteen per cent. of such book profit.

This amendment will take effect from 1st April, 2012 and will, accordingly, apply in relation to the
assessment year 2012-13 and subsequent years.

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