A MEMORANDUM – TAX RATES AFTER BUDGET 2014

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I. Rates of income-tax in respect of
income liable to tax for the assessment year 2014-2015.
In respect of income of all categories
of assessees liable to tax for the assessment year 2014-2015, 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, 2013, 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 2014-2015, in the following
cases:—
(a) in the case of every individual 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, 1961
(hereinafter referred to as ‘the Act’), cooperative societies, firms or local
bodies, the amount of income-tax shall be increased by a surcharge for the
purposes of the Union at the rate of ten percent of such income-tax in case of
a person having a total income exceeding one crore rupees.
However, marginal relief shall be
allowed in all these cases to ensure that 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.


Also, in the case of persons mentioned
in (a) above having total income chargeable to tax under section 115JC
of the Act and where such income exceeds one crore rupees, surcharge at the
rate mentioned above shall be levied and marginal relief shall also be
provided.
(b) in the case of a domestic company-
(i) having total income exceeding one
crore rupees but not exceeding ten 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 five per cent of such income tax;
(ii) having total income exceeding ten
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 ten per cent
of such income-tax.
(c) in the case of a company, other than
a domestic company,-
(i) having total income exceeding one
crore rupees but not exceeding ten 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 per cent of such income tax.
(ii) having total income exceeding ten
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 five per cent of such
income-tax.
However, marginal relief shall be
allowed in all these cases to ensure that the total amount payable as
income-tax and surcharge on total income exceeding one crore rupees but not
exceeding ten 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 total amount payable as income-tax
and surcharge on total income exceeding ten crore rupees, shall not exceed the
total amount payable as income-tax and surcharge on a total income of ten crore
rupees, by more than the amount of income that exceeds ten crore rupees.
Also, in the case of every company
having total income chargeable to tax under section 115JB of the Act and where
such income exceeds one crore rupees but does not exceed ten crore rupees, or
exceeds ten crore rupees, as the case may be, surcharge at the rates mentioned
above shall be levied and marginal relief shall also be provided.
(d) In other cases (including sections
115-O, 115QA, 115R or 115TA), the surcharge shall be levied at the rate of ten
percent
(2) Education Cess —
For assessment year 2014-2015,
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 2014-2015 from certain incomes other than
“Salaries”.
The rates for deduction of income-tax at
source during the financial year 2014-2015 from certain incomes other than “Salaries”
have been specified in Part II of the First Schedule to the Bill. The rates for
all the categories of persons will remain the same as those specified in Part
II of the First Schedule to the Finance Act, 2013, for the purposes of
deduction of income-tax at source during the financial year 2013-2014.
(1) Surcharge—
The amount of tax so deducted, in the
case of a non-resident person (other than a company), shall be increased by a surcharge
at the rate of ten 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 . The amount of tax so deducted, in the case of a company other
than a domestic company, shall be increased by a surcharge,-
(i) 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 but does not exceed
ten crore rupees;
(ii) At the rate of five 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 ten 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 company other than a 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 2014-2015.
The rates for deduction of income-tax at
source from “Salaries” during the financial year 2014-2015 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 2014-2015 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) and (iii) 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 Act (not being a case to
which any other Paragraph of Part III applies) are as under:—
Up-to Rs.2,50,000
Nil
Rs. 2,50,001 to Rs. 5,00,000
10 per cent
Rs. 5,00,001 to Rs. 10,00,000
20 per cent
Above Rs. 10,00,000
30 per cent
(ii) 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,—
Up-to Rs.3,00,000
Nil
Rs. 3,00,001 to Rs. 5,00,000
10 per cent
Rs. 5,00,001 to Rs. 10,00,000
20 per cent
Above Rs. 10,00,000
30 per cent
(iii) 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,—
Up-to Rs.5,00,000
Nil
Rs. 5,00,001 to Rs. 10,00,000
20 per cent
Above Rs. 10,00,000
30 per cent
The amount of income-tax computed in
accordance with the preceding provisions of this Paragraph shall be increased
by a surcharge at the rate of ten percent of such income-tax in case of a
person having a total income exceeding one crore rupees.
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.
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 financial year 2013-14.
The amount of income-tax shall be
increased by a surcharge at the rate of ten percent of such income-tax in case
of a cooperative society having a total income exceeding one crore rupees.
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.
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
financial year 2013-2014. The amount of income-tax shall be increased by a
surcharge at the rate of ten percent of such income-tax in case of a firm having
a total income exceeding one crore rupees. 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.
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 financial year 2013-2014.
The amount of income-tax shall be
increased by a surcharge at the rate of ten percent of such income-tax in case
of a local authority having a total income exceeding one crore rupees.
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.
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 financial year
2013-2014.
The existing surcharge of five per cent
in case of a domestic company shall continue to be levied if the total income
of the domestic company exceeds one crore rupees but does not exceed ten crore
rupees. The surcharge at the rate of ten percent shall continue to be levied if
the total income of the domestic company exceeds ten crore rupees. In case of
companies other than domestic companies, the existing surcharge of two per cent
shall continue to be levied if the total income exceeds one crore rupees but
does not exceed ten crore rupees. The surcharge at the rate of five percent
shall continue to be levied if the total income of the company other than
domestic company exceeds ten crore rupees.
However, the total amount payable as
income-tax and surcharge on total income exceeding one crore rupees but not
exceeding ten 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
total amount payable as income-tax and surcharge on total income exceeding ten
crore rupees, shall not exceed the total amount payable as income-tax and
surcharge on a total income of ten crore rupees, by more than the amount of
income that exceeds ten crore rupees.

In other cases (including sections
115-O, 115QA, 115R or 115TA) the surcharge shall continue to be levied at the
rate of ten percent For financial year 2014-2015, 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
(wherever applicable), in all cases. No marginal relief shall be available in
respect of such Cess.
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