Welcome to our informative blog on the current taxation rules! In this ever-evolving landscape of tax laws and regulations, staying up-to-date is essential for individuals and businesses alike. Our blog aims to provide you with valuable insights, expert analysis, and practical tips to navigate the complexities of taxation in today's world. Whether you're a taxpayer looking to understand your rights and obligations or a professional seeking to enhance your knowledge, we've got you covered. Join us as we delve into various aspects of taxation, unraveling key concepts, highlighting recent changes, and offering guidance to help you make informed decisions. Get ready to demystify taxes and empower yourself with the knowledge to optimize your financial affairs.
The rates are applicable for the financial year 2023-24 post incorporating amendments as per Finance Act, 2023.
Income Tax Rates
Old Regime
For Individuals, Hindu Undivided Family(HUF), Association of Persons(AOP), Body of Individuals and Artificial juridical persons
Total Income | Tax Rates |
Up to Rs. 2,50,000 (a) (b) | NIL |
Rs. 2,50,001 to Rs. 5,00,000 (d) (e) | 5% |
Rs. 5,00,001 to Rs. 10,00,000 (d) | 20% |
Rs. 10,00,001 and above (c)(d) | 30% |
(a) In case of a resident individual of the age of 60 years or above but below 80 years, the basic exemption limit is Rs. 3,00,000.
(b) In case of a resident individual of age of 80 years or above, the basic exemption limit is Rs 5,00,000.
(c) Rate of surcharge:
• 37% on base tax where specified income* exceeds Rs. 5 crore;
• 25% where specified income* exceeds Rs. 2 crore but does not exceed Rs. 5 crore
• 15% where total income exceeds Rs. 1 crore but does not exceed Rs. 2 crore; and
• 10% where total income exceeds Rs 50 lakhs but does not exceed Rs. 1 crore.
In case of AOP, consisting of only companies as its members, the rate of surcharge not to exceed 15%.
*Specified income – Total income excluding income by way of dividend on shares and short term capital gains in case of listed equity shares, equity oriented mutual fund units, units of business trust and
long-term capital gains.
Marginal relief for such person is available.
(d) Health and Education cess @ 4% on aggregate of base tax and surcharge.
(e) Resident individuals having total income not exceeding Rs. 5,00,000 can avail rebate of 12,500 or actual tax liability whichever is lower.
New Regime
For Individuals, Hindu Undivided Family(HUF), Association of Persons(AOP), Body of Individuals and Artificial juridical persons
Total Income | Tax Rates |
Up to 3,00,000 | NIL |
From 3,00,001 to 6,00,000 | 5% |
From 6,00,001 to 9,00,000 | 10% |
From 9,00,001 to 12,00,000 | 15% |
From 12,00,001 to 15,00,000 | 20% |
Above 15,00,000 | 30% |
a) For adopting New Regime, most of the deductions/exemptions such as section 80C, 80D, etc. are to be foregone. However, standard deduction of Rs. 50,000 against salary income is proposed to be
allowed under New Regime. The new tax regime is considered a default tax regime. Investors may opt for the old tax regime. Persons as mentioned above have the option to be taxed under either of
the options. New Regime once exercised can be changed in subsequent years (not applicable for business income).
b) Resident individuals having total income not exceeding Rs. 7,00,000 can avail rebate of 25,000 or actual tax liability whichever is lower.
c) Rate of surcharge:
• 25% where specified income* exceeds Rs. 2 crore
• 15% where total income exceeds Rs. 1 crore but does not exceed Rs. 2 crore; and
• 10% where total income exceeds Rs 50 lakhs but does not exceed Rs. 1 crore.
In case of AOP, consisting of only companies as its members, the rate of surcharge not to exceed 15%.
Securities Transaction Tax
STT is levied on the value of taxable securities transactions as under:
Transaction | Rates | Payable By |
Purchase/ Sale of equity shares (delivery based) | 0.1% | Purchaser/Seller |
Purchase of units of equity oriented mutual fund | NIL | Purchaser |
Sale of units of equity oriented mutual fund (delivery based) | 0.001% | Seller |
Sale of equity shares, units of business trust, units of equity oriented mutual fund (non-delivery based) | 0.025% | Seller |
Sale of an option in securities | 0.0625% | Seller |
Sale of an option in securities, where option is exercised | 0.125% | Purchaser |
Sale of a futures in securities | 0.0125% | Seller |
Sale or surrender or redemption of a unit of an equity oriented fund to an insurance company, on maturity or partial withdrawal, with respect to unit linked insurance policy issued by such insurance company on or after the first day of February, 2021 | 0.001% | Seller |
Sale of units of an equity oriented fund to the Mutual Fund | 0.001% | Seller |
Sale of unlisted equity shares and units of business trust under an initial offer | 0.2% | Seller |
Special Rates for Non-Residents
The following incomes in the case of non-residents are taxed at special rates on gross basis:
Transaction | Rates |
Dividend | 20% |
Interest received on loans given in foreign currency to Indian concern or Government of India (not being interest referred to in section 194LB or section 194LC) | 20% |
Income received in respect of units purchased in foreign currency of specified Mutual Funds / UTI | 20% |
Royalty or fees for technical services (b) | 20% |
Interest income from a notified infrastructure debt fund, specified loan agreement, specified long-term bonds, rupee denominated bonds(c) and business trust | 20% |
Interest on FCCB, Dividend on GDRs | 10% |
(a) These rates will be further increased by applicable surcharge and health and education cess.
(b) In case the non-resident has a Permanent Establishment (PE) in India and the royalty/ fees for technical services paid is effectively connected with such PE, the same is taxable at 40% (plus
applicable surcharge and health and education cess) on net basis.
(2) Tax on non-resident sportsmen or sports association on specified income @20% plus applicable surcharge and health and education cess.
Income-tax implications on income distributed by a Mutual Fund
Type of Investor | Witholding Tax Rate |
Resident**** | 10%* |
NRI | 20%** or rate as per applicable tax treaty*** (whichever is lower) |
*Tax is not deductible if income in respect of units of a mutual fund is below Rs. 5,000 in a financial year.
** The base tax is to be further increased by surcharge at the rate of:
• 37% on base tax where income or aggregate of such income exceeds Rs. 5 crore;
• 25% where income or aggregate of such income exceeds Rs. 2 crore but does not exceed Rs. 5 crore;
• 15% where income or aggregate of such income exceeds Rs. 1 crore but does not exceed Rs. 2 crore; and
• 10% where income or aggregate of such income exceeds Rs. 50 lakhs but does not exceed Rs. 1 crore
In case investor is opting for ‘New Regime’ as mentioned on page 2, the rate of surcharge not to exceed 25%.
Further, “Health and Education Cess” is to be levied at 4% on aggregate of base tax and surcharge.
*** Tax treaty benefit can be claimed subject to fulfillment of stipulated conditions as well as interpretation of Article of relevant tax treaty.
**** As per section 139AA of the Income tax Act, 1961 (‘the Act’) read with rule 114AAA of the Income-tax Rules, 1962, in the case of a resident person, whose PAN has become inoperative due to PAN
– Aadhaar not being linked on or before 30 June 2023, it shall be deemed that he has not furnished the PAN and tax could be withheld at a higher rate of 20% as per section 206AA of the Act.
Capital Gains Taxation
| Individual/HUF (5) | Domestic Company (@) | NRI ($) |
Equity Oriented Schemes (@@)
| | | |
• Long Term Capital Gains (units held for more than 12 months) | 10%* | 10%* | 10%* |
• Short Term Capital Gains (units held for 12 months or less) | 15% | 15% | 15% |
Other Than Equity Oriented Schemes@@@ | | | |
• Long Term Capital Gains (units held for more than 36 months) | 20% (&) | 20% (&) | Listed - 20%& Unlisted - 10%*** |
• Short Term Capital Gains (units held for 36 months or less) | 30%^ | 0% or 25%^^ or 22%^^^ | 30%^ |
Tax deductible at source under the Act (Applicable to NRI Investors) #
Equity Oriented Schemes | Short term capital gains ($) | Long term capital gains ($) |
Long term capital gains | 15% | Unlisted - 10%*** |
Other than equity oriented schemes | 30% ^ | 10%*** (for unlisted) (&) 20% (&) (for listed) |
* Income-tax at the rate of 10% (without indexation benefit and foreign exchange fluctuation) to be levied on long-term capital gains exceeding Rs. 1 lakh provided transfer of such units is subject to
Securities Transaction Tax (‘STT’).
@ Surcharge at 7% on base tax is applicable where total income of domestic corporate unit holders exceeds Rs 1 crore but does not exceed 10 crores and at 12% where total income exceeds 10 crores.
However, surcharge at flat rate of 10 percent to be levied on base tax f or the companies opting for lower rate of tax of 22%/15%. Further, “Health and Education Cess” to be levied at the rate of 4%
on aggregate of base tax and surcharge.
@@ A view may be adopted that sale of fund of funds being classified as "equity-oriented fund" and "specified mutual fund" under the Act should be taxable at the rate of 15% (plus applicable surcharge
and cess) as per section 111A read with section 50AA
@@@Section 50AA as introduced by Finance Act, 2023 deems any gains on transfer / redemption of specified mutual funds acquired on or after 1 April 2023 as short-term capital gains. For the purposes
of section 50AA, “specified mutual fund” means a mutual fund by whatever name called, where not more than 35 percent of its total proceeds is invested in the equity shares of domestic companies.
The scheme is identified as a “specified mutual fund”
$ Surcharge to be levied at:
• 37% on base tax where specified income** exceeds Rs. 5 crore;
• 25% where specified income** exceeds Rs. 2 crore but does not exceed Rs. 5 crore;
• 15% where total income exceeds Rs. 1 crore but does not exceed Rs. 2 crore; and
• 10% where total income exceeds Rs. 50 lakhs but does not exceed Rs. 1 crore
In case total income includes income by way of dividend on shares and short-term capital gains on units of equity oriented mutual fund schemes and long-term capital gains on mutual fund schemes,
the rate of surcharge on the said type of income not to exceed 15%. In case investor is opting for ‘New Regime’ as mentioned on page 2, the rate of surcharge not to exceed 25%.
** Specified income – Total income excluding income by way of dividend on shares and short-term capital gains on units of equity oriented mutual fund schemes and long-term capital gains on mutual
fund schemes.
Further, Health and Education Cess to be levied at the rate of 4% on aggregate of base tax and sur charge.
# Short term/ long term capital gain tax (along with applicable Surcharge and Health and Education Cess) will be deducted at the time of redemption of units in case of NRI investors. Tax treaty benefit
can be claimed for withholding tax on capital gains subject to fulfillment of stipulated conditions.
& After providing indexation.
*** Without indexation. And foreign exchange fluctuation
^ Assuming the investor falls into highest tax bracket.
^^ If total turnover or gross receipts in the financial year 2021-22 does not exceed Rs. 400 crores.
^^^ This lower rate should be applicable if the investor has opted for the beneficial tax regime as per section 115BAA / 115BA
Further, the domestic companies are subject to minimum alternate tax (except for those who opt for lower rate of tax of 22% / 15%.
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Sources of this blog include reports produced by ICICI Prudential AMC.