What are the Important changes in Income Tax Act??? Read this important article…

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     CA Akash C Thakrar, Rajkot

Income Tax Rates

Total Income Existing Proposed (Option)
Individual, HUF, AOP, BOI (Conditions in next slides)
0 – 2,50,000 Nil Nil
2,50,001 – 5,00,000 5% 5%
5,00,001 – 7,50,000  


7,50,001 – 10,00,000 15%
10,00,001 – 12,50,000  


12,50,001 – 15,00,000 25%
More than 15,00,000 30%
  • There is no change in Surcharge and Cess.
  • There is no change in Tax rate of Company, Firm,LLP

Conditions…1 : List of Exemptions / Deductions not allowed under proposed Tax Regime.

  • Leave Travel Allowance
  • House Rent Allowance
  • Standard Deduction of Rs.50,000 available to salaried taxpayers
  • Entertainment Allowance and Professional Tax u/s16
  • Deduction of 15,000 from Family Pension
  • Set off of House Property Loss against any other head of income
  • All Chp-VI A Deductions except deduction u/s 80CCD(2) and u/s80JJAA
  • No set off of Brought Forward Loss or Unabsorbed Depreciation
  • No deduction for Additional Depreciation
  • No deduction or exemption u/s10/10AA/24(b)/32AD/33AB/33ABA/35AD/35CCC
  • No deduction or exemption for allowances or perquisites


Conditions… 2

  • Individual or the HUF with businessIncome
    • Option once exercised for a previous year shall be valid for that previous year

and all subsequentyears.

  • The option can be withdrawn only once for a previous year other than the year in

 which it was exercised and thereafter, the individual or HUF shall never be eligible

to exercise option under this section


  • Individual or the HUF without businessIncome
    • Option to be exercised for every previousyear


  • Depreciation shall be allowed for any subsequent year so however, that where there

is a depreciation allowance in respect of a block of asset which has not been given full

effect to prior to the assessment year beginning on 1st April, 2021, corresponding

adjustment shall bemade.


Residential Status

Residence OfIndia

Particulars Existing Proposed
Indian Citizen living in india 182 days or more in a year OR 60 days or more in a year AND 365+ days in 4 years No Change
Foreign or Indian Citizen comes on visit to India (NRI / PIO) 182 Days or more in a year 120 Days or more in a year

Not OrdinaryResidence


Particulars Existing Proposed
Individual / HUF Non Resident in India in nine out of ten preceding previous yearsor

Seven preceding previous years been in India for 729 Days or less

Non Resident in India in seven out of ten preceding previous years

An Individual being a citizen of India, shall be deemed to be resident in India in any previous year, if he is not liable to tax in any other country or territory by reason of his domicile or residence or any other criteria of similar nature.

Interest on loan for affordable housing (Section 80EEA)


Particulars Existing Proposed
Deduction Upto Rs. 1,50,000 in respect of Payment of Interest on Loan taken for Affordable Housing Loan sanctioned upto 31st March, 2020. Loan sanctioned upto 31st March, 2021

Deposit Insurance Coverage

Particulars Old Regime New Regime
Deposit Insurance and Credit Guarantee Corporation


Rs. 1,00,000 5,00,000

Dividend Distribution Tax (DDT) Removed

  • DDT not applicable to domesticcompanies
  • Dividend income Taxable in the hands of shareholders / unitholders at the applicable taxrate

Provision for E-Appeal

  • It is proposed to empower Central Government to notify an e-appeal scheme for disposal of appeal by an appellate system with dynamic jurisdiction by one or more Commissioner(Appeals)

Cost of Acquisition (asset acquired before 01.04.2001)

Existing Proposed
Fair Market Value as on 1-4-2001 or Actual cost at the option of the assessee. Fair Market Value as on 1-4-2001 or Actual cost at the option of assessee subject to Fair Market value shall not exceeds Stamp Value as on 1-4- 2001.



Section Particulars Penalty
271AAD Books of accounts found to have

–                          False entry

–                          Omission of an entry to evade taxliability

Equal to the aggregate amount of such false or omitted entry
271K Failure to furnish Statements (with reference to sec. 35, 80G) Rs.10,000 to 1,00,000

Sec-139 Due dates of Return of Income


Type Due Dates
Existing Proposed
Income Tax Return (w/o Audit) 31st July No Change
Income Tax Return (with Audit) 30th September 31st October
Audit Report 30th September 30th September
Income Tax Return (Working Partner) 30th September 31st October
Income Tax Return (Non-working Partner) 31st July 31st October


Applicability of Tax Audit Provisions


Turnover or Gross Receipts



Profit and gains


Existing Tax Audit Applicable?

Proposed Tax Audit Applicable?
Cash Receipts / Payments*
Upto 5% of total > 5% of total

Upto 1 crores

< 8% (or 6%) Yes (44AD) Yes (44AD) Yes (44AD)
8% (or 6%) or more No No No

1 – 2 crores

< 8% (or 6%) Yes (44AD) Yes (44AB) Yes (44AB)
8% (or 6%)or more No No No

2 – 5 crores

Upto 8%(or 6%) Yes (44AB) No Yes (44AB)
>8% (or 6%) Yes (44AB) No Yes (44AB)




Receipts / Payments = Sales, turnover or gross receipts / Expenditure





Section Particular Existing Proposed



Payment to the contractors Expression ‘work’ defined ‘work’ expanded to include

supply according to requirements of the manufacturer, even if raw material is supplied by associate enterprise of such customer




Any person other than Individual/HUF Professional Service, Remuneration, Fees, Commission, Royalties, Technical Services : TDS Rate 10% Professional Service, Remuneration, Fees, Commission, Royalties :TDS Rate 10%

Technical Services : TDS Rate 2%



Sale done by the Participants through e-commerce platform 1% on gross amount



Section Particular Existing Proposed



Remittance by Authorized Dealer under LRS being an authorized dealer, who receives an amount, forremittance out of India from a buyer, being a person remitting such amountout of India under the Liberalized Remittance Scheme of the ReserveBank of India shall collect TCS @ 5% if the amount being remitted is more then Rs.7 lacs. W.E.F 01/10/2020.



Sale of Tour Packages being a seller of an overseas tour programme package, whoreceives any amount from a buyer, being the person who purchases such

package shall collect TCS @ 5%. W.E.F 01/10/2020.


The author may be contacted on:


Chartered Accountant

223 Star Plaza, Phulchab Chowk, Rajkot-360001.

Mobile No: +91 99257 78245

Disclaimer: This Presentation has been prepared solely for general information purpose and is not intended to

constitute a recommendation, offer or advise.





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