Important Keyword: Budget 2021, Income Tax, Income Tax Filing.
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Income Tax Slabs and Rates
Every year, the finance minister unveils the Union Budget on February 1st, marking a significant event in India’s fiscal calendar. This pivotal moment sets the stage for the financial year ahead, dictating new tax structures and regulations that will shape economic activities and individual finances.
Following the Budget announcement, revised income tax slabs and rates come into effect for the subsequent financial year. This dynamic adjustment reflects the government’s ongoing efforts to fine-tune taxation policies in alignment with broader economic goals and societal needs.
Let us understand the income tax slabs under old tax regime and new tax regime for FY 2023-24 i.e., AY 2024-25:
Income Tax Slab under Old Tax Regime
For Individuals/HUFs below the age of 60 years
Income Tax Slab
Income Tax Rate
Up to INR 2,50,000
NIL
INR 2,50,001 to INR 5,00,000
5% above INR 2,50,000
INR 5,00,001 to INR 10,00,000
INR 12,500 + 20% above INR 5,00,000
Above INR 10,00,000
INR 1,12,500 + 30% above INR 10,00,000
For Senior Citizens (Individuals/HUFs between the age of 60 years-80 years)
Income Tax Slab
Income Tax Rate
Up to INR 3,00,000
NIL
INR 3,00,001 to INR 5,00,000
5% above INR 3,00,000
INR 5,00,001 to INR 10,00,000
INR 10,000 + 20% above INR 5,00,000
Above INR 10,00,000
INR 1,10,000 + 30% above INR 10,00,000
For Super Senior Citizens (Individuals/HUFs above the age of 80 years)
Income Tax Slab
Income Tax Rate
Up to INR 5,00,000
NIL
INR 5,00,001 to INR 10,00,000
20% above INR 5,00,000
Above INR 10,00,000
INR 1,00,000 + 30% above INR 10,00,000
An extra 4% Health and Educational Cess is levied on the calculated tax amount to fund essential health and education initiatives. Additionally, the surcharge, which varies based on income brackets, is applied to the income tax. Here are the surcharge rates for individuals/HUFs who choose the old tax regime:
Income Range
INR 50 lakhs to INR 1 Cr.
INR 1 Cr. to INR 2 Cr.
INR 2 Cr. to INR 5 Cr.
Above INR 5 Cr.
Surcharge Rate
10%
15%
25%
37%
Income Tax Slabs for Individuals/HUFs under New Tax Regime
Income Tax Slab
Income Tax Rate
Up to INR 3,00,000
NIL
INR 3,00,001 to INR 6,00,000
5% above INR 3,00,000
INR 6,00,001 to INR 9,00,000
INR 15,000 + 10% above INR 6,00,000
INR 9,00,001 to INR 12,00,000
INR 45,000 + 15% above INR 9,00,000
INR 12,00,001 to INR 15,00,000
INR 90,000 + 20% above INR 12,00,000
Above INR 15,00,000
INR 1,50,000 + 30% above INR 15,00,000
An additional 4% Health and Educational Cess is imposed on the calculated tax amount.
For individuals/HUFs selecting the new tax regime rates, the surcharge rates are as follows:
ncome Range
INR 50 lakhs to INR 1 Cr.
INR 1 Cr. to INR 2 Cr.
Above INR 2 Cr
Surcharge Rate
10%
15%
25%
Income Tax Slabs for Other than Individuals/HUFs
Rate for AOP/BOI/Any other artificial juridical person
Net Income Range
Income Tax Rates
Up to INR 2,50,000
NIL
INR 2,50,000 to INR 5,00,000
5%
INR 5,00,000 to INR 10,00,000
20%
Above INR 10,00,000
30%
Cess and Surcharge are the same as the rate applicable to Individuals and HUFs.
Rate for Partnership Firms
Tax rate
30%
Cess
4%
Surcharge (applicable only if total income exceeds INR 1 Cr.)
12%
Rate for Domestic Companies
Domestic Company
Tax Rates
if opted for Section 115BA
25%
if opted for Section 115BAA
22%
if opted for Section 115BAB (Manufacturing)
15%
Any other Domestic Company
30%
An additional 4% Health and Educational Cess is levied on the tax amount, including the surcharge.
For companies, the surcharge rate are as follows:
7% if total income exceeds INR 1 Cr.
12% if total income exceeds INR 10 Cr.
A flat 10% if the company has opted for Section 115BAA & 115BAB.
Rate for co-operative society
Net Income Range
Income Tax Rates
Up to INR 10,000
10%
INR 10,000 to INR 20,000
20%
Above INR 20,000
30%
An additional 4% Health and Educational Cess is applied to the calculated tax amount.
For Assessment Year 2023-24 onward, the surcharge rate are as follows:
7% if the net income falls within the range of INR 1 Cr. to INR 10 Cr.
12% if the net income exceeds INR 10 Cr.
For local authorities, the tax rate is 30%.
Additionally, an extra 4% Health and Educational Cess is levied on the calculated tax amount.
Surcharge is applicable as follows:
12% of Income Tax when the total income exceeds INR 1 Cr.
Surcharge on Income Tax is an additional charge introduced to ensure that the wealthy contribute more in taxes compared to those with lower incomes. It is calculated based on the total income tax amount and not the total income itself.
Surcharge Rates
The below table shows the surcharge on income tax applicable to any individual, HUF, AOP, BOI, or any artificial judicial person.
Important Keyword: Income Tax, Income Tax Filing, ITR of deceased person.
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How to file income tax return of deceased person in India?
Filing an income tax return for a deceased individual is a necessary step to ensure compliance with tax regulations. Even after their passing, if the deceased person had taxable income up until the date of their death, it’s the responsibility of their legal heir to file the ITR on their behalf.
The process begins with the legal heir registering themselves on the Income Tax Department’s website. This registration is essential for initiating the filing process and representing the deceased individual in tax matters.
Once registered, the legal heir can proceed with filing the income tax return for the deceased. It’s important to note that the return should cover the income earned by the deceased individual up to the date of their demise.
The filing process involves providing accurate information about the deceased person’s income, deductions, and any applicable taxes. Additionally, the legal heir must ensure proper documentation and verification of the details provided in the return.
Legal Heir of the Deceased
In the event of a taxpayer’s demise, the responsibility of serving as the legal representative typically falls upon the spouse or a close relative. Alternatively, if the deceased individual left a will, the designated executor assumes this role. To formalize their status as the legal heir, obtaining a legal heir certificate is essential.
To acquire a legal heir certificate, one can approach the Tehsildar of the respective jurisdiction and submit an application along with the required supporting documents. Upon submission, the office conducts a basic verification process before issuing the certificate.
Several documents serve as valid legal heir certificates for registration purposes:
Legal heir certificate issued by a court of law
Certificate of surviving family members issued by local revenue authorities
Legal heir certificate issued by local revenue authorities
Registered will of the deceased individual
Family pension certificate issued by the State or Central government
How to Register Legal Heir in Income Tax Website?
To initiate the process of filing an income tax return on behalf of a deceased taxpayer, the legal heir or representative must first register as the legal heir and obtain approval from the tax authorities. Here are the steps involved:
Login to the e-Filing Portal: Access the income tax department’s e-filing portal and log in using the credentials of the legal heir.
Register as Representative: Navigate to the “My Account” section and select the option to register as a representative.
Choose the type of request as “New Request”.
Select the “Category to Register” as “Deceased (Legal Heir)” and click on “Proceed”.
To proceed with the registration as a legal representative on the income tax e-filing portal, the following details need to be provided:
PAN of the Deceased: Enter the Permanent Account Number (PAN) of the deceased taxpayer.
Surname of the deceased: Provide the surname or last name of the deceased individual.
Middle Name of the deceased: Enter the middle name, if any, of the deceased taxpayer.
First Name of the deceased: Provide the first name or given name of the deceased individual.
Date of Death: Specify the date on which the taxpayer passed away.
Bank account details of Legal heir: Furnish the bank account details of the legal heir or representative, which may include:
Bank account holder’s name
Bank account number
IFSC code of the bank branch
To complete the registration process as a legal representative on the income tax e-filing portal, follow these steps to attach the required documents and submit the request:
Attach Documents: Against the provided hyperlink for attaching documents, upload the following attachments:
PAN card of the Deceased
Copy of PAN card of the legal heir
Death Certificate of the deceased
Copy of Legal Heir Proof (such as legal heir certificate issued by the court or local revenue authorities)
Any relevant order passed in the name of the deceased, if applicable
Submit Request: Once all the necessary documents are attached, submit the request for registration as a legal representative.
Review and Approval: The request will be forwarded to the e-Filing Administrator for review. The Administrator will assess the submitted documents and either approve or reject the request based on the provided information.
Confirmation Email: If the request is approved, the e-Filing Administrator will send a confirmation email to the registered email ID of the legal representative.
By following these steps and ensuring that all required documents are accurately provided, the registration process as a legal representative for filing the income tax return on behalf of the deceased taxpayer can be completed successfully.
How to File Income Tax Return of Deceased Person after Registration of Legal Heir in India?
After receiving approval for the legal heir request, the authorized representative should proceed with the following steps on the e-filing portal:
Login and Access Upload Return: Log in to the e-filing portal using the credentials. Navigate to the “Upload Return” section under the e-file tab.
Select PAN and ITR Form: Choose the PAN of the deceased individual for whom the return needs to be filed. Select the appropriate Income Tax Return (ITR) form applicable to the deceased’s income situation.
Choose Assessment Year and Upload XML File: Specify the relevant Assessment Year for which the return is being filed. Upload the XML file containing the details of the income and deductions.
Digital Signing or E-Verification: As a legal heir, you have the option to digitally sign the ITR on behalf of the deceased or opt for e-verification using the available methods provided by the Income Tax Department.
One-Time Filing: Keep in mind that the ITR can only be filed once by the legal representative. If there are ongoing income streams from the deceased’s assets or investments, the legal heir must apply for an estate PAN and continue filing returns accordingly.
Determining the Income of the Deceased
To calculate the income earned by the deceased individual, we consider the earnings accumulated from the beginning of the financial year until the date of death. Additionally, any income generated after the individual’s passing is taxable in the hands of the legal heirs. For instance, if individual A, who passed away on November 20, received INR 70,000 as monthly interest on fixed deposits, the income computation would be as follows:
Income in the deceased’s possession: INR 70,000 x 8 months = INR 5,60,000 Taxable income for the legal heir (to be filed in personal ITR): INR 70,000 x 4 months = INR 2,80,000
Legal Responsibilities of the Legal Heir
The legal heir assumes responsibility for filing the deceased individual’s income tax return and settling any outstanding income tax liabilities. If the deceased received any notices before their demise, the legal heir is tasked with addressing them. Moreover, any penalties or interest imposed by the Income Tax Authorities are the legal heir’s responsibility to settle.
However, the amount owed by the legal heir on behalf of the deceased cannot exceed the assets inherited. In cases where there is a tax refund for the deceased, the legal heir can claim it.
It is recommended to receive the refund in a bank account where the deceased was a joint account holder with another individual. Alternatively, if no joint account exists, the nominee appointed by the deceased can access the account.
Important Keyword: Assessee, Income Tax, Income Tax Filing.
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Income Tax Assessee under the Income Tax Act
An income tax assessee refers to an individual or entity obligated to pay taxes as per the Income Tax Act, 1961. Section 2(7) of the act broadly defines an income tax assessee as any person liable to pay taxes on earned income or incurred losses within a single assessment year. This encompasses individuals involved in various scenarios:
Individuals undergoing assessment proceedings for their income.
Those responsible for the income of another person, making them assessable.
Individuals or entities experiencing losses, whether personally or on behalf of another.
Individuals entitled to tax refunds.
Understanding the concept of an assesses is pivotal as it delineates the individuals or entities subject to tax obligations and procedures.
Who is a Person under Income Tax Act?
Under the Income Tax Act of 1961, the definition of “Person” is provided under section 2(31). This term encompasses both natural and artificial entities, including associations of persons, bodies of individuals, local authorities, and artificial juridical persons.
There are seven primary categories of “persons” outlined in the Income Tax Act:
Individual
Hindu Undivided Family
Partnership Firm
Company
Association of Persons (AOP) or Body of Individuals (BOI)
Local Authority
Artificial Juridical Body (not covered under any of the above-mentioned categories)
Regarding the types of assessees under the Income Tax Act, they can be classified into the following categories:
Normal Assessee
Representative Assessee
Deemed Assessee
Assessee-in-default
Here’s a breakdown of each type of assessee for better understanding
Normal Assessee
A normal assessee refers to an individual who is obligated to pay taxes on the total income earned during a financial year or on any losses incurred. Additionally, if an individual is liable to pay any interest or penalty to the government or is entitled to receive any refund under the provisions of the Income Tax Act, they are also considered a normal assessee. Furthermore, any individual against whom proceedings under the Income Tax Act are ongoing, regardless of whether any tax or other amount is payable by them, is categorized as a normal assessee.
Representative Assessee
A representative assessee is a person entrusted with the responsibility of paying taxes on behalf of a third party, typically in cases where the taxpayer is a non-resident, minor, or mentally incapacitated individual who is unable to file taxes independently. In such instances, an agent or guardian is appointed to fulfill the tax obligations on behalf of the taxpayer, ensuring compliance with the relevant tax regulations.
Deemed Assessee
A deemed assessee is an individual who is legally obligated to pay taxes under the provisions of the Income Tax Act. This category includes:
Every person who is deemed to be an assessee under the Act. Every person in respect of whom any proceeding under this Act has been initiated for the assessment of income or loss, either for themselves or for another person for whom they are assessable, or for the refund due to them or to such other person. Furthermore, this category encompasses individuals responsible for paying taxes on behalf of others in specific circumstances.
Examples include:
The legal representative of a deceased person, such as the eldest son or other legal heirs in cases of intestacy, or the executor of a will.
Agents acting on behalf of non-residents.
Trustees of trusts.
Guardians of minors.
Assessee-in-Default
An assessee-in-default refers to individuals who fail to fulfill their statutory tax payment obligations, resulting in default. For instance, an employer is required to deduct taxes from the salaries of employees before disbursing payment and remit the deducted taxes to the government by the due date. If the employer fails to deposit these taxes, they are categorized as an assessee-in-default.
Important Keyword: Income Tax, Income Tax Filing, Operation Clean Money.
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Operation Clean Money
The Income Tax Department initiated Operation Clean Money on January 31, 2017, in response to the significant cash deposits made between November 9 and December 30, 2016, during the demonetization period. The primary objective was to scrutinize taxpayers’ cash transactions, including exchanges and savings of banned notes, and take necessary actions if discrepancies were found.
The mission of Operation Clean Money is to foster a tax-compliant society characterized by fair, transparent, and non-intrusive administration. The goal is to cultivate a culture where every Indian citizen takes pride in fulfilling their tax obligations.
In its second phase, which commenced in May 2017, Operation Clean Money reached out to 18 lakh taxpayers via emails and SMS, prompting them to provide responses online through the e-filing portal. The Income Tax Department regularly updates the status of Operation Clean Money, detailing the actions taken concerning the identified accounts.
First Phase of the Operation Clean Money
The 3 key areas on which the first phase focused are:
Preliminary Assessment
During the assessment phase conducted amidst the demonetization period, the Income Tax Department scrutinized the accounts of depositors and compared them with their tax profiles. This process identified 17.92 lakh individuals who were then requested to provide an online response regarding the transactions they had conducted. Both business and non-business entities were examined to analyze the distribution of large cash deposits during the initial assessment.
E-Verification Process
Once identified and notified via the income tax e-filing platform, account holders were prompted to submit an online explanation. The Income Tax Department provided supportive resources such as user guides and FAQs to aid taxpayers in this process. In addition to email and SMS notifications, the department released advertisements to inform taxpayers about the registration and submission procedures online.
Of the 17.92 lakh accounts flagged, 13.33 lakh account holders responded online without the need to visit the IT office. These responses pertained to cash deposits totaling approximately INR 2.89 lakh crore. Furthermore, taxpayers voluntarily disclosed additional details concerning 41,600 bank accounts with cash deposits. The department meticulously reviewed the explanations provided by taxpayers, closing the verification process if found to be justified and genuine.
Targeted Enforcement Actions
Following assessment, high-risk cases were identified, leading to the following actions:
Survey action was undertaken in 8,239 cases, resulting in the detection of undisclosed income worth INR 6,746 crores.
Over 400 cases were referred to the Enforcement Directorate/Central Bureau of Investigation for further investigation.
Search action was conducted on 900 groups, resulting in the seizure of assets valued at INR 900 crore.
Second Phase of Operation Clean Money
The second phase of Operation Clean Money, initiated on April 14, 2017, targeted an additional 5.56 lakh individuals with inconsistent tax profiles. This phase aimed to identify high-risk taxpayers for further investigation. To achieve this, two specialized data analytics agencies and one business process management agency were engaged to analyze demonetization data and monitor taxpayer compliance.
Key objectives of the second phase included:
Comprehensive Risk Assessment: Analyzing taxpayer data to assess the level of risk associated with each case.
Differentiated Targeted Treatment: Tailoring enforcement actions based on the risk profile of each taxpayer.
Enable Citizen Engagement: Facilitating communication and cooperation between taxpayers and tax authorities.
Identification of New Cases for Online Verification: Identifying additional cases for online verification based on risk analysis.
Identification of High-risk Cases using Advanced Analytical Techniques: Leveraging advanced analytical techniques to pinpoint high-risk cases.
Ensuring Complete and Accurate Reporting of Information: Ensuring that all relevant information is accurately reported and acted upon.
A framework was established to categorize cases according to their risk levels, enabling targeted and efficient enforcement actions.
Risk Category
Number of People
High Risk
1 lakh
Medium Risk
7.54 lakh
Low Risk
5.95 lakh
Very Low Risk
3.14 lakh
Operation Clean Money Portal and its Features
The government introduced a dedicated portal for Operation Clean Money, equipped with several key features:
Transparent Tax Administration: The portal facilitates transparent tax administration by providing updates on sanitized cases and explanations of verification issues. Additionally, thematic analysis reports are shared to enhance understanding.
Comprehensive Information: Serving as a centralized resource, the portal offers detailed guides, FAQs, quick reference materials, and training toolkits related to the e-verification process. This comprehensive information ensures clarity and accessibility for taxpayers.
Citizen Engagement: The OPC portal encourages citizen engagement by offering various avenues for participation. Citizens can take pledges, contribute to educating fellow citizens, share their experiences, and provide feedback. This engagement fosters collaboration and strengthens the effectiveness of Operation Clean Money.
Important Keyword: Income Tax, Income Tax Filing, New Tax Regime, Section 115BAC.
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Section 115BAC: New Tax Regime
In the 2020 budget, Finance Minister Nirmala Sitharaman unveiled a novel tax framework embodied in section 115BAC of the Income Tax Act, 1961, exclusively tailored for individuals and Hindu Undivided Families (HUF). This revamped tax structure boasts reduced income tax slab rates while bidding adieu to various rebates, exemptions, and deductions.
Despite the allure of lower slab rates, a substantial cohort of taxpayers continued to adhere to the old tax regime when filing their Income Tax Returns (ITR). In a bid to streamline compliance and entice more taxpayers towards the new regime, the finance minister recalibrated the tax slabs and rates under the new framework. Consequently, the new regime was ordained as the default tax structure for taxpayers commencing from the financial year 2023-24.
New Tax Slab Rates
The below table shows the new income tax slabs and rates under the new regime for FY 2023-24/AY 2024-25 onwards:
Tax Slab
Tax Rate
Up to INR 3,00,000
Nil
INR 3,00,001 – 6,00,000
5%
INR 6,00,001 – 9,00,000
10%
INR 9,00,001 – 12,00,000
15%
INR 12,00,001 – 15,00,000
20%
Above INR 15,00,000
30%
Modifications in the New Regime as per Budget 2023
Under the new tax regime, taxpayers are provided with the flexibility to opt for and file their Income Tax Returns (ITR) under the old tax regime if they prefer. However, it’s noteworthy that the new regime will serve as the default tax structure, meaning any return filed after the due date will be processed under this framework.
One of the notable changes under the new regime is the revision of the rebate under section 87A. Previously set at INR 12,500, it has now been increased to INR 25,000. Consequently, individuals earning up to INR 7,00,000 are exempt from paying any tax.
Moreover, the introduction of a standard deduction of INR 50,000 for salaried individuals, pensioners, and family pensioners aims to provide further relief. Additionally, the highest rate of surcharge on income exceeding INR 5 crore has been reduced to 25% from 37%, resulting in a reduction of the maximum marginal rate to 39% from 42.74%.
Furthermore, marginal tax relief has been extended to taxpayers with taxable incomes ranging between INR 7 lakhs to INR 7.5 lakhs after accounting for eligible deductions. This adjustment ensures that individuals are taxed only for income slightly above the INR 7 lakhs threshold. For instance, if your total taxable income amounts to INR 7,10,000, the tax payable will be INR 10,000 instead of the previous INR 26,000.
Changes in Deductions and Exemptions under section 115BAC
The Budget 2020 introduced significant changes to the tax landscape by eliminating various tax exemptions and deductions under the new tax regime, resulting in simplified tax compliance. Here’s an overview of deductions that have been removed according to clause (i) of sub-section (2) of section 115BAC:
Leave travel concession (section 10(5))
House rent allowance (section 10(13A))
Official and personal allowances, excluding prescribed ones (section 10(14))
Allowances to MPs/MLAs (section 10(17))
Allowance for the income of minors (section 10(32))
Exemption for SEZ unit (section 10AA)
Standard deduction, entertainment allowance, and employment/professional tax (section 16)
Interest under section 24 for self-occupied or vacant property (section 23(2))
Additional depreciation (section 32(iia))
Deductions under sections 32AD, 33AB, 33ABA
Various deductions for donations or expenditure on scientific research under section 35
Deductions under sections 35AD or 35CCC
Deduction from family pension under section 57(iia)
Deductions under chapter VIA, including sections 80C, 80CCC, 80CCD, 80D, 80DD, 80DDB, 80E, 80EE, 80EEA, 80EEB, 80G, 80GG, 80GGA, 80GGC, 80IA, 80-IAB, 80-IAC, 80-IB, 80-IBA, etc. However, deductions under section 80CCD(2) (employer contribution to the employee’s notified pension scheme), 80CCH (investment in Agni Veer Fund), and section 80JJAA (for new employment) remain claimable.
Set-off of Losses and Unabsorbed depreciation as per section 115BAC
Under section 115BAC of the Income Tax Act, losses incurred from house property can only be offset against other income from house property. Additionally, these losses cannot be carried forward in the new income tax regime.
Similarly, in the case of business income, individuals or Hindu Undivided Families (HUFs) are not allowed to claim set-off of brought forward business losses or unabsorbed depreciation. Moreover, they cannot carry forward such losses to the extent they pertain to deductions or exemptions withdrawn as per clause (i) of sub-section (2) of section 115BAC.
Opting for the new scheme
As per income tax regulations, individuals with business income are required to submit Form 10-IE before the due date for filing their Income Tax Return (ITR). For cases not requiring audit, the due date is July 31st, and for cases where audit is applicable, the due date is October 31st. These submissions must be made through the IT Portal.
Income Tax Slab and Rates under New Regime for FY 2022-23
Income Tax Slab
Tax Rate
Up to INR 2,50,000
Nil
INR 2,50,001 – 5,00,000
5%
INR 5,00,001 – 7,50,000
10%
INR 7,50,001 – 10,00,000
15%
INR 10,00,001 – 12,50,000
20%
INR 12,50,001 – 15,00,000
25%
Above INR 15,00,000
30%
Switching between Old Tax Regime & New Tax Regime
Business Income
For individuals with business income, the choice between the old and new tax regimes isn’t an annual decision. Once they opt for the new tax regime, they’re only allowed to switch back to the old tax regime once in their lifetime. After reverting to the old regime, they cannot choose the new tax regime again.
In practical terms, individuals with business income may need to complete Form 10-IE twice: first, to transition to the new tax regime, and later, if they decide to return to the old regime.
Non-Business Income
Individuals with salaried income and no business income enjoy more flexibility. They have the option to choose between the old and new tax regimes each year. This allows them to evaluate their tax situation annually and select the regime that best suits their financial circumstances.
