Circular No.- 19 /2015
Circular No. 19/2015 was issued by the Central Board of Direct Taxes on 27 November 2015. Its subject is Circular No.- 19 /2015.
These are the Board’s explanatory notes to a Finance Act. They are the department’s account of what the amendments were meant to do, and they are cited constantly — but the words of the Act govern where the two part.
The Board's explanatory notes on the amendments made by the Finance Act, 2015, arranged as a commentary with the usual amendments-at-a-glance table mapping each section to the paragraph that explains it. The ground covered, on that table, includes the rate structure, the taxation regime for real estate investment trusts and infrastructure investment trusts, the narrowed definition of charitable purpose, the alignment of the treatment of Government grants with the Income Computation and Disclosure Standards, tax-neutral merger of similar mutual fund schemes, global depository receipts, the Board's power to prescribe how the period of stay in India is computed and the changed residence test for companies, the indirect transfer provisions and the source rule for interest received by a non-resident, the rule that a fund manager in India does not constitute a business connection of an offshore fund, the section 80C benefit for the Sukanya Samriddhi Account Scheme, benefits for the Swachh Bharat Kosh and Clean Ganga Fund, exemption for the Core Settlement Guarantee Fund, pass-through status for Category I and Category II Alternative Investment Funds, the rationalisation of accumulation of income by charitable trusts in sections 11 and 13, the balance 50 per cent additional depreciation, the incentives and additional investment allowance under section 32AD for Andhra Pradesh, Bihar, Telangana and West Bengal, conditions for approved in-house research facilities, capitalisation of interest and bad debts under the Standards, deduction for sugarcane purchased by co-operative sugar factories at a Government-approved price, the raised limits in sections 80CCC, 80CCD, 80D, 80DD, 80DDB and 80U, the deduction for employment of new workmen in section 80JJAA, the higher threshold for specified domestic transactions, the deferment of the General Anti-Avoidance Rule, and the reduced rate on royalty and fees for technical services for non-residents.
The Board's practice of explaining, after each Finance Act, what the amendments do and from when they take effect.
CIRCULAR NO.- 19 /2015
F. No. 142/14/2015-TPL
Government of India
Ministry of Finance
Department of Revenue
(Central Board of Direct Taxes)
*******
Dated, the 27th November, 2015EXPLANATORY NOTES TO
THE PROVISIONS OF THE
FINANCE ACT, 2015
CIRCULARINCOME-TAX ACT
Finance Act, 2015 ─ Explanatory Notes to the Provisions of the Finance Act, 2015
CIRCULAR NO. - 19 /2015, DATED 27th NOVEMBER, 2015
AMENDMENTS AT A GLANCE
Section/Schedule Particulars/Paragraph number
Finance Act, 2015
First Schedule Rate Structure, 3.1 - 3.4Income-tax Act, 1961
2 Taxation Regime for Real Estate Investment Trusts (REIT)
and Infrastructure Investment Trusts (Invit), 34.1 - 34.7;
Rationalisation of definition of charitable purpose in the
Income-tax Act, 4.1 - 4.5; Alignment of provisions relating
to taxation of Government Grants with the provisions of
Income Computation and Disclosure Standards (ICDS), 5.1 -
5.3; Tax neutrality on merger of similar schemes of Mutual
Funds, 18.1-18.4; Amendments relating to Global
Depository receipts (GDRs), 32.1-32.10.6 Power of the Central Board of Direct Taxes to prescribe the
manner and procedure for computing the period of stay in
India,6.1-6.4; Amendment to the conditions for determining
residency status in respect of Companies,7.1-7.7.9 Clarity relating to Indirect transfer provisions, 8.1-8.5;
Clarity regarding source rule in respect of interest received
by the non-resident in certain cases; 9.1-9.8.9A Fund Managers in India not to constitute business
connection of offshore funds, 10.1-10.11.10 Tax benefits under section 80C for the girl child under the
Sukanya Samriddhi Account Scheme, 20.1-20.4; Tax
benefits for Swachh Bharat Kosh and Clean Ganga Fund
27.1-27.5; Exemption to income of Core Settlement
Guarantee Fund (SGF) of the Clearing Corporations, 11.1-
11.4; Pass through status to Category –I and Category –II
Alternative Investment Funds, 35.1-35.7; Taxation Regime
for Real Estate Investment Trusts (REIT) and Infrastructure
Investment Trusts (Invit), 34.1-34.7.11 Rationalisation of provisions of section 11 of the Income-tax
Act relating to accumulation of Income by charitable trusts
and institutions, 12.1 -12.4.13 Rationalisation of provisions of section 11 of the Income-tax Act
relating to accumulation of Income by charitable trusts and
institutions, 12.1 -12.4.32 Allowance of balance 50% additional depreciation, 13.1-
13.3; Incentives for the States of Andhra Pradesh, Bihar,
Telangana and West Bengal, 14.1-14.4.32AD Incentives for the States of Andhra Pradesh, Bihar,
Telangana and West Bengal: Additional Investment
Allowance, 14.1-14.2.4.35 Prescribed conditions relating to maintenance of accounts,
audit etc to be fulfilled by the approved in-house R&D
facility, 15.1 - 15.3.36 Alignment of provisions relating to capitalisation of interest
and claim of deduction of bad debts with the provisions of
the ICDS,16.1 - 16.6; Deduction for payment made for
purchase of sugar cane by co-operative sugar factories at a
price fixed by or fixed with the approval of the Government,
17.1 - 17.4.47 Clarity relating to Indirect transfer provisions, 8.1-8.5;
Tax neutrality on merger of similar schemes of Mutual
Funds, 18.1-18.4.49 Clarity relating to Indirect transfer provisions, 8.1-8.5;
Amendments relating to Global Depository receipts (GDRs),
32.1-32.10; Tax neutrality on merger of similar schemes of
Mutual Funds, 18.1-18.4; Cost of acquisition of a capital
asset in the hands of resulting company to be the cost for
which the demerged company acquired the capital asset
;19.1-19.3.80C Tax benefits under section 80C for the girl child under the
Sukanya Samriddhi Account Scheme, 20.1-20.4.80CCC Raising the limit of deduction under 80CCC, 21.1 - 21.3.
80CCD Additional deduction under 80CCD, 22.1 - 22.3.
80D Amendment in section 80D relating to deduction in respect of
health insurance premia, 23.1 - 23.5.80DD Raising the limit of deduction under section 80DD and 80U
for persons with disability and severe disability, 24.1 - 24.8.80DDB Raising the limit of deduction under section 80DDB, 25.1 -
25.6.80G Tax benefits for Swachh Bharat Kosh and Clean Ganga Fund,
27.1-27.5; One hundred per cent deduction for National
Fund for Control of Drug Abuse, 26.1-26.3.80JJAA Deduction for employment of new workmen, 28.1-28.5.
80U Raising the limit of deduction under section 80DD and 80U
for persons with disability and severe disability, 24.1 - 24.8.92BA Raising the threshold for specified domestic transaction,
29.1 - 29.3.95 Deferment of provisions relating to General Anti Avoidance
Rule ("GAAR"), 30.1 – 30.5.111A Taxation Regime for Real Estate Investment Trusts (REIT)
and Infrastructure Investment Trusts (Invit), 34.1 - 34.7.115A Reduction in rate of tax on Income by way of Royalty and
Fees for technical services in case of non-residents, 31.1 -
31.3.115ACA Amendments relating to Global Depository receipts (GDRs),
32.1-32.10.115JB Rationalising the provisions of section 115JB, 33.1.-33.6.
115U Pass through status to Category –I and Category –II
Alternative Investment Funds, 35.1-35.7.115UA Taxation Regime for Real Estate Investment Trusts (REIT)
and Infrastructure Investment Trusts (Invit), 34.1 - 34.7.Chapter XII-FB consisting of
section 115UB
Pass through status to Category –I and Category –II
Alternative Investment Funds, 35.1-35.7.132B Settlement Commission, 49.1 - 49.13.
139 Furnishing of return of income by certain universities and
hospitals referred to in section 10 (23C) of the Income-tax
Act,36.1-36.4;Return of Income is to be filed by 'beneficial
owner' or 'beneficiary' of a foreign asset, 37.1 - 37.5; Pass
through status to Category –I and Category –II Alternative
Investment Funds, 35.1-35.7.151 Simplification of approval regime for issue of notice for reassessment, 38.1 - 38.3.
153C Assessment of income of a person other than the person in
whose case search has been initiated or books of account,
other documents or assets have been requisitioned, 39.1 -
39.3.154 Rationalisation of provisions relating to Tax Deduction at
Source (TDS) and Tax Collection at Source (TCS), 47.1-
47.20.156 Rationalisation of provisions relating to Tax Deduction at
Source (TDS) and Tax Collection at Source (TCS), 47.1-
47.20.158AA Procedure for appeal by revenue when an identical
question of law is pending before Supreme Court, 40.1 - 40.6.192 Rationalisation of provisions relating to Tax Deduction at
Source (TDS) and Tax Collection at Source (TCS), 47.1-
47.20.192A Simplification of Tax Deduction at Source (TDS) mechanism
for Employees Provident Fund Scheme (EPFS), 41.1- 41.8.194A Rationalisation of provisions relating to deduction of tax on
interest (other than interest on securities), 42.1- 42.11.194C Clarification regarding deduction of tax from payments
made to transporters, 43.1- 43.9.194-I Taxation Regime for Real Estate Investment Trusts (REIT)
and Infrastructure Investment Trusts (Invit), 34.1-34.7.194LBA Taxation Regime for Real Estate Investment Trusts (REIT)
and Infrastructure Investment Trusts (Invit), 34.1-34.7.194LBB Pass through status to Category –I and Category –II
Alternative Investment Funds, 35.1-35.7.194LD Extension of eligible period of concessional tax rate under
section 194LD of the Income-tax Act, 44.1-44.4.195 Rationalisation of provisions relating to Tax Deduction at
Source (TDS) and Tax Collection at Source (TCS), 47.1-
47.20.197A Enabling of filing of Form 15G/15H for payment made
under life insurance policy, 45.1- 45.4.200 Rationalisation of provisions relating to Tax Deduction at
Source (TDS) and Tax Collection at Source (TCS), 47.1-
47.20.200A Rationalisation of provisions relating to Tax Deduction at
Source (TDS) and Tax Collection at Source (TCS), 47.1-
47.20.203A Relaxing the requirement of obtaining TAN for certain
deductors, 46.1-46.3.206C Rationalisation of provisions relating to Tax Deduction at
Source (TDS) and Tax Collection at Source (TCS), 47.1-
47.20.206CB Rationalisation of provisions relating to Tax Deduction at
Source (TDS) and Tax Collection at Source (TCS), 47.1-
47.20.220 Rationalisation of provisions relating to Tax Deduction at
Source (TDS) and Tax Collection at Source (TCS), 47.1-
47.20.234B Interest for defaults in payment of advance tax in case of reassessment and where additional income is disclosed
before the Settlement Commission under section 245C,
48.1-48.7.245A Settlement Commission, 49.1-49.13.
245D Settlement Commission, 49.1-49.13.
245H Settlement Commission, 49.1-49.13.
245HA Settlement Commission, 49.1-49.13.
245K Settlement Commission, 49.1-49.13.
245-O Eligibility for appointment as Law Member in the Authority
for Advance Ruling (AAR),50.1-50.3.246A Rationalisation of provisions relating to Tax Deduction at
Source (TDS) and Tax Collection at Source (TCS), 47.1-
47.20.253 Orders passed by the prescribed authority under section
sub-clauses (vi) and (via) of clause (23C) of section 10 made
appealable before Income-tax Appellate Tribunal, 51.1-
51.4.255 Raising the income-limit of the cases that may be decided by
single member bench of ITAT, 52.1-52.3.263 Revision of order that is erroneous in so far as it is
prejudicial to the interests of revenue, 53.1-53.3.269SS Mode of taking or accepting certain loans, deposits and
specified sums and mode of repayment of loans or deposits
and specified advances, 54.1-54.6.269T Mode of taking or accepting certain loans, deposits and
specified sums and mode of repayment of loans or deposits
and specified advances, 54.1-54.6.271 Amount of tax sought to be evaded for the purposes of
penalty for concealment of income under clause (iii) of subsection (1) of section 271, 55.1-55.5.271D Mode of taking or accepting certain loans, deposits and
specified sums and mode of repayment of loans or deposits
and specified advances, 54.1-54.6.271E Mode of taking or accepting certain loans, deposits and
specified sums and mode of repayment of loans or deposits
and specified advances, 54.1-54.6.271FAB Fund Managers in India not to constitute business
connection of offshore funds, 10.1-10.11.271GA Clarity relating to Indirect transfer provisions, 8.1-8.5.
271-I Rationalisation of provisions relating to Tax Deduction at
Source (TDS) and Tax Collection at Source (TCS), 47.1-
47.20.272A Rationalisation of provisions relating to Tax Deduction at
Source (TDS) and Tax Collection at Source (TCS), 47.1-
47.20.273B Fund Managers in India not to constitute business
connection of offshore funds, 10.1-10.11.285A Clarity relating to Indirect transfer provisions, 8.1-8.5.
288 Certain accountants not to give reports/certificates,56.1-
56.5.295 Enabling the Board to notify rules for giving foreign tax
credit, 57.1-57.3.Wealth-tax Act, 1957
3 Abolition of levy of wealth-tax under Wealth-tax Act, 1957
, 58.1-58.6.Finance (No.2) Act,2004
97 Taxation Regime for Real Estate Investment Trusts (REIT)
and Infrastructure Investment Trusts (Invit), 34.1 - 34.7.98 Taxation Regime for Real Estate Investment Trusts (REIT)
and Infrastructure Investment Trusts (Invit), 34.1 - 34.7.100 Taxation Regime for Real Estate Investment Trusts (REIT)
and Infrastructure Investment Trusts (Invit), 34.1 - 34.7.101 Taxation Regime for Real Estate Investment Trusts (REIT)
and Infrastructure Investment Trusts (Invit), 34.1 - 34.7.1. Introduction
1.1 "The Finance Act, 2015 (hereafter referred to as 'the Act') as passed by the
Parliament, received the assent of the President on the 14th day of May, 2015 and has
been enacted as Act No. 20 of 2015." This circular explains the substance of the
provisions of the Act relating to direct taxes.2. Changes made by the Act
2.1 The Act has-
(i) specified the rates of income-tax for the assessment year 2015-16 and the rates of
income-tax on the basis of which tax has to be deducted at source and advance tax has
to be paid during financial year 2015-16.(ii) amended sections 2, 6, 9, 10, 11, 13, 32, 35, 36, 47, 49, 80C ,80CCC, 80CCD, 80D,
80DD, 80DDB, 80G, 80JJAA, 80U, 92BA, 95, 111A, 115A, 115ACA, 115JB, 115U, 115UA,
132B, 139, 153C, 154, 156, 192, 194A, 194C, 194I, 194LBA, 194LD, 195, 197A, 200,
200A, 203A, 206C, 220, 234B, 245A, 245D, 245H, 245HA, 245K, 245O, 246A, 253, 255,
263, 269T, 271, 271D, 271E, 272A, 273B, 288, and 295 of the Income-tax Act, 1961;(iii) Substituted new sections for sections 151 and 269SS;
(iv) inserted new sections 9A, 32AD, 158AA, 192A, 194LBB, 206CB, 271FAB, 271GA,
271-I and 285A in the Income-tax Act, 1961;(v) inserted Chapter XII-FB consisting of section 115UB in the Income-tax Act, 1961;
(vi) repealed the Wealth-tax Act, 1957;
(vii) amended sections 97, 98, 100 and 101 of the Finance (No.2) Act, 2004.
3. Rate structure
3.1 Rates of income-tax in respect of incomes liable to tax for the assessment year
2015-163.1.1 "In respect of income of all categories of assessees liable to tax for the assessment
year 2015-16, the rates of income-tax have been specified in Part I of the First Schedule
to the Act." These rates are the same as those laid down in Part III of the First Schedule to
the Finance (No.2) Act, 2014 for the purposes of computation of "advance tax",
deduction of tax at source from "Salaries" and charging of tax payable in certain cases
during the financial year 2014-15.The main features of the rates specified in the said Part I are as follows:
3.1.2 Individual, Hindu undivided family, association of persons, body of
individuals or artificial juridical person. –Paragraph A of Part I of the First Schedule specifies the rates of income-tax in the case of
every individual, Hindu undivided family, association of persons, body of individuals or
artificial juridical person (other than a co-operative society, firm, local authority and
company) as under:-Income
chargeable to
tax
Rate of income- tax
Individual (other than
senior and very senior
citizen), HUF,
association of persons,
body of individuals
and artificial juridical
person.
Individual, resident
in India who is of
the age of sixty
years or more but
less than eighty
years. (senior
citizen)
Individual, resident
in India who is of
the age of eighty
years or more (very
senior citizen)
Up to Rs.
2 ,50,000
Nil
Nil
Nil
Rs. 2,50,001 - Rs.
3,00,000
Rs. 3,00,001 - Rs. 10%
5,00,000
10%
Rs. 5,00,001 - Rs.
10,00,000
20% 20% 20%
Exceeding Rs.
10,00,000
30% 30% 30%"The amount of income-tax so computed 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, marginal relief shall be available so 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 Education Cess on income-tax shall continue to be levied at the rate of two per cent
on the amount of tax computed inclusive of surcharge." In addition, the amount of tax
computed shall be further increased by an additional surcharge called Secondary and
Higher Education Cess on income-tax at the rate of one per cent of such income-tax
inclusive of surcharge.No marginal relief shall be available in respect of Education Cess and Secondary and
Higher Education Cess.For instance, if the income of an individual is Rs. 1,01,00,000 and income-tax computed
is Rs. 28,55,000. Surcharge on the income-tax at the rate of 10% of such tax is Rs.
2,85,500. Thus the total income-tax inclusive of surcharge is Rs. 31,40,500 without
providing marginal relief. On providing marginal relief, the income-tax inclusive of
surcharge shall be limited to Rs. 29,55,000. Then the education cess of two per cent is to
be computed on Rs. 29,55,000 which works out to Rs. 59,100. In addition, the amount of
tax computed shall also be increased by an additional cess called Secondary and Higher
Education Cess on income-tax at the rate of one per cent of such income-tax which for
the present case of income-tax of Rs. 29,55,000 works out to be Rs. 29,550. Thus, where
the amount of tax computed is Rs. 29,55,000, the Education Cess of two per cent is Rs.
59,100, the Secondary and Higher is Rs. 29,550. The total cess in this case will amount
to Rs. 88,650 (i.e., Rs. 59,100 + Rs. 29,550). No marginal relief shall be available in
respect of such Cess.3.1.3 Co-operative Societies
In the case of every co-operative society, the rates of income-tax have been
specified in Paragraph B of Part I of the First Schedule to the Act. The rates are as
follows:-Income chargeable to tax Rate
Up to Rs. 10,000 10%
Rs. 10,001 -Rs. 20,000 20%
Exceeding Rs. 20,000 30%"The amount of income-tax so computed shall be increased by a surcharge at the rate of
ten percent. of such income-tax in case of a co-operative society having a total income
exceeding one crore rupees." However, marginal relief shall be available so 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."The Education Cess on income-tax shall continue to be levied at the rate of two per cent
on the amount of tax computed inclusive of surcharge." In addition, the amount of tax
computed shall be further increased by an additional surcharge called Secondary and
Higher Education Cess on income-tax at the rate of one per cent of such income-tax
inclusive of surcharge.No marginal relief shall be available in respect of Education Cess and Secondary and
Higher Education Cess.3.1.4 Firms –
In the case of every firm, the rate of income-tax of thirty per cent has been specified in
Paragraph C of Part I of the First Schedule to the Act."The amount of income-tax so computed 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, marginal relief shall be available so 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."The Education Cess on income-tax shall continue to be levied at the rate of two per cent
on the amount of tax computed inclusive of surcharge." In addition, the amount of tax
computed shall be further increased by an additional surcharge called Secondary and
Higher Education Cess on income-tax at the rate of one per cent of such income-tax
inclusive of surcharge.No marginal relief shall be available in respect of Education Cess and Secondary and
Higher Education Cess.3.1.5 Local Authorities –
In the case of every local authority, the rate of income-tax has
been specified at thirty per cent in Paragraph D of Part I of the First Schedule to the Act."The amount of income-tax so computed 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, marginal relief shall be available so 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."The Education Cess on income-tax shall continue to be levied at the rate of two per cent
on the amount of tax computed inclusive of surcharge." In addition, the amount of tax
computed shall be further increased by an additional surcharge called Secondary and
Higher Education Cess on income-tax at the rate of one per cent of such income-tax
inclusive of surcharge.No marginal relief shall be available in respect of Education Cess and Secondary and
Higher Education Cess.3.1.6 Companies –
In the case of a company, the rate of income-tax has been specified in Paragraph E of
Part I of the First Schedule to the Act.In case of a domestic company, the rate of income-tax is thirty per cent of the total
income. The tax computed shall be enhanced by a surcharge of five per cent where such
domestic company has total income exceeding one crore rupees but not exceeding ten
crore rupees. Surcharge at the rate of ten per cent shall be levied if the total income of
the company exceeds ten crore rupees.In the case of a company other than a domestic company, royalties received from
Government or an Indian concern under an approved agreement made after 31-3-1961
but before 1-4-1976, shall be taxed at fifty per cent. Similarly, fees for technical services
received by such company from Government or an Indian concern under an approved
agreement made after 29-2-1964 but before 1-4-1976, shall be taxed at fifty per cent.
On the balance of the total income of such company, the tax rate shall be forty per cent.
The tax computed shall be enhanced by a surcharge of two per cent. where such
company has total income exceeding one crore rupees but not exceeding ten crore
rupees. Surcharge at the rate of five per cent shall be levied if the total income of the
company other than domestic company exceeds ten crore rupees.However, marginal relief shall be allowed in the case of every company to ensure that
(i) 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,
(ii) 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."Education Cess on income-tax shall continue to be levied at the rate of two per cent on
the amount of tax computed, inclusive of surcharge in the case of every company." Also,
such amount of tax and surcharge shall be further increased by an additional surcharge
called Secondary and Higher Education Cess on income-tax at the rate of one per cent of
the amount of tax computed, inclusive of surcharge. No marginal relief shall be available
in respect of Education Cess and Secondary and Higher Education Cess.3.2 Rates for deduction of income-tax at source from certain incomes during the
financial year 2015-16.3.2.1 "In every case in which tax is to be deducted at the rates in force under the
provisions of sections 193, 194, 194A, 194B, 194BB, 194D, 194LBA and 195 of the
Income-tax Act, the rates for deduction of income-tax at source during the financial
year 2015-16 have been specified in Part II of the First Schedule to the Act." The rates
for deduction of income-tax at source during the financial year 2015-16 will continue to
be the same as those specified in Part II of the First Schedule to the Finance (No.2) Act,
2014 except that in case of payments in the nature of income by way of royalty or fee for
technical services referred to in section 115A, made to non-residents (other than a
company) or a foreign company, the rate shall be ten per cent. of such income instead of
twenty five per cent..3.2.2 Surcharge –
The tax deducted at source in the following cases shall be increased by a surcharge for
purposes of the Union indicated below:-(i) In case of every non-resident person not being a company, the rate of surcharge is
twelve percent of tax where the income or aggregate of such income paid or likely to be
paid and subject to the deduction exceeds one crore rupees.(ii) In case of payments made to foreign companies, the rate of surcharge is two per cent
of such income 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. In case where such income or the aggregate of such incomes paid or likely
to be paid to a foreign company and subject to the deduction exceeds ten crore rupees,
the rate of surcharge is five percent.(iii) No surcharge on tax deducted at source shall be levied in the case of an individual,
Hindu undivided family, association of persons, body of individuals, artificial juridical
person, co-operative society, local authority, firm ,being a resident or a domestic
company.3.2.3 Education Cess –
"Education Cess on income-tax shall continue to be levied for the purposes of the Union
at the rate of two per cent of income-tax and surcharge, if any." For instance, if the
amount of income of a foreign company is Rs. 1,20,00,000 and tax is deducted from such
foreign company is Rs. 12,00,000 at the rate of 10 per cent., then the surcharge at the
rate of two per cent. on such tax deducted shall be Rs. 24,000. Education cess on such
amount of tax deducted and surcharge (Rs. 12,00,000 + Rs. 24,000 = Rs. 12,24,000) shall
be Rs.24,480.In addition, the amount of tax deducted and surcharge shall be further increased by an
additional surcharge called Secondary and Higher Education Cess on income-tax at the
rate of one per cent in all such cases. Thus in the above illustration, where the amount of
tax deducted is Rs. 12,00,000, the surcharge is Rs. 24,000, the said Secondary and
Higher Education Cess will be computed at the rate of one percent on Rs. 12,24,000
which works out to be Rs. 12,240. The total cess in this case will, therefore, amount to
Rs. 36,720 (i.e., Rs24,480 + Rs. 12,240).3.3 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 2015-16.3.3.1 "The rates for deducting income-tax at source from 'Salaries' and computing
advance tax during the financial year 2015-16 have been specified in Part III of the
First Schedule to the Act." These rates are also applicable for charging income-tax during
the financial year 2015-16 on current incomes in cases where accelerated assessments
have to be made, e.g., provisional assessment of shipping profits arising in India to
non-residents, assessment of persons leaving India for good during that financial year,
assessment of persons who are likely to transfer property to avoid tax, assessment of
bodies formed for short duration, etc. The rates are as follows:-3.3.2 Individual, Hindu undivided family, association of persons, body of
individuals or artificial juridical person –Paragraph A of Part III of the First Schedule specifies the rates of income-tax in the case
of every individual, Hindu undivided family, association of persons, body of individuals
or artificial juridical person (other than a co-operative society, firm, local authority and
company).. The basic exemption limit, rates of tax and slabs of income for various
categories remain the same as in financial year 2014-15. The rates of tax during the
financial year 2015-16 are as follows:-Income
chargeable to tax
Rate of income- tax
Individual (other
than senior and
very senior citizen),
HUF, association of
persons, body of
individuals and
artificial juridical
person.
Individual,
resident in India
who is of the age
of sixty years or
more but less than
eighty years.
(senior citizen)
Individual
resident in
India, who is of
the age of eighty
years or more.
(very senior
citizen)
Up to Rs. 2 ,50,000 Nil
Rs. 2,50,001 - Rs. Nil
3,00,000
10%
Nil
Rs. 3,00,001 - Rs.
5,00,000
10%
Rs. 5,00,001 - Rs.
10,00,000
20% 20% 20%
Exceeding Rs.
10,00,000
30% 30% 30%"The amount of income-tax so computed shall be increased by a surcharge at the rate of
twelve percent. of such income-tax in case of a person having a total income exceeding
one crore rupees as against the rate of ten per cent. for the financial year 2014-15."
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 Education Cess on income-tax shall continue to be levied at the rate of two per cent
on the amount of tax computed inclusive of surcharge." In addition, the amount of tax
computed shall be further increased by an additional surcharge called Secondary and
Higher Education Cess on income-tax at the rate of one per cent of such income-tax
inclusive of surcharge. No marginal relief shall be available in respect of Education Cess
and Secondary and Higher Education Cess.3.3.3 Co-operative Societies
In the case of every co-operative society, the rates of income-tax have been specified in
Paragraph B of Part III of the First Schedule to the Act. The rates are as follows:Income chargeable to tax Rate
Up to Rs. 10,000 10%
Rs. 10,001 -Rs. 20,000 20%
Exceeding Rs. 20,000 30%"The amount of income-tax so computed shall be increased by a surcharge at the rate of
twelve percent. of such income-tax in case of a co-operative society having a total
income exceeding one crore rupees as against the rate of ten per cent. for the financial
year 2014-15."However, marginal relief shall be available. Accordingly, 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."Education Cess on income-tax and Secondary and Higher Education Cess on income-
tax shall be levied at the rate of two per cent and one per cent respectively of the amount
of income-tax computed inclusive of surcharge." No marginal relief shall be available in
respect of Education Cess and Secondary and Higher Education Cess.3.3.4 Firms –
In the case of every firm, the rate of income-tax of thirty per cent has been specified in
Paragraph C of Part III of the First Schedule to the Act."The amount of income-tax so computed shall be increased by a surcharge at the rate of
twelve percent. of such income-tax in case of a firm having a total income exceeding one
crore rupees as against the rate of ten per cent. for the financial year 2014-15."However, marginal relief shall be available. Accordingly, 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 Education Cess on income-tax shall continue to be levied at the rate of two per cent
on the amount of tax computed inclusive of surcharge." In addition, the amount of tax
computed shall be further increased by an additional surcharge called Secondary and
Higher Education Cess on income-tax at the rate of one per cent of such income-tax
inclusive of surcharge. No marginal relief shall be available in respect of Education Cess
and Secondary and Higher Education Cess.3.3.5 Local Authorities
In the case of every local authority, the rate of income-tax has been specified at thirty
per cent in Paragraph D of Part III of the First Schedule to the Act."The amount of income-tax so computed shall be increased by a surcharge at the rate of
twelve percent. of such income-tax in case of a local authority having a total income
exceeding one crore rupees as against the rate of ten per cent. for the financial year
2014-15."However, marginal relief shall be available. Accordingly, 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."Education Cess on Income-tax and Secondary and Higher Education Cess on income-
tax shall be levied at the rate of two per cent and one per cent respectively of the amount
of income tax and surcharge." No marginal relief shall be available in respect of
Education Cess and Secondary and Higher Education Cess.3.3.6 Companies
In the case of a company, the rate of income-tax has been specified in Paragraph E of
Part III of the First Schedule to the Act.In case of a domestic company, the rate of income-tax is thirty per cent of the total
income. "The tax computed shall be enhanced by a surcharge of seven per cent where
such domestic company has total income exceeding one crore rupees but not exceeding
ten crore rupees as against the rate of five per cent. for the financial year 2014-15."
Surcharge at the rate of twelve per cent shall be levied if the total income of the
company exceeds ten crore rupees as against the rate of ten per cent. for the financial
year 2014-15.In the case of a company other than a domestic company, royalties received from
Government or an Indian concern under an approved agreement made after 31-3-1961
but before 1-4-1976, shall be taxed at fifty per cent. Similarly, fees for technical services
received by such company from Government or Indian concern under an approved
agreement made after 29-2-1964 but before 1-4-1976, shall be taxed at fifty per cent.
On the balance of the total income of such company, the tax rate shall be forty per cent.
The tax computed shall be enhanced by a surcharge of two per cent where such
company has total income exceeding one crore rupees but not exceeding ten crore
rupees. Surcharge at the rate of five per cent shall be levied if the total income of the
company other than domestic company exceeds ten crore rupees.However, marginal relief shall be allowed in the case of every company to ensure that
(i) 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,
(ii) 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."Education Cess on Income-tax and Secondary and Higher Education Cess on income-
tax shall be levied at the rate of two per cent and one per cent respectively of the amount
of income-tax computed including surcharge." No marginal relief shall be available in
respect of Education Cess and Secondary and Higher Education Cess.3.4 Surcharge on Additional Income-tax
Where additional income-tax has to be paid under section 115-O or section 115-QA or
sub-section (2) of section 115R or section 115TA of the Income-tax Act, that is to say,
on distribution of dividend by domestic companies or distribution of income by a
company on buy-back of shares from shareholders or on distribution of income by a
mutual fund to its unit holders or on distribution of income by a securitization trust to
its investors, the additional tax so payable shall be increased by a surcharge of twelve
percent of such tax as against the rate of ten per cent. for the financial year 2014-15.
In an assessment or appeal for assessment year 2016-17 where the year from which an amendment operates is in issue, and wherever the Board's stated intention behind a Finance Act, 2015 change is relied on.
Source: the Income Tax Department’s own published text — its page for this instrument.