Income Tax Act: Explanatory Notes to the Provisions of the Finance Act, 2022 – CBDT
Income Tax Act: Explanatory Notes to the Provisions of the Finance Act, 2022 – CBDT Circular No. 23/2022 dated 03.11.2022
CIRCULAR NO. 23/2022
No. 370142/48/2022-TPL
Government of India Ministry of Finance Department of Revenue
(Central Board of Direct Taxes)
****
Dated the 3rd of November, 2022
EXPLANATORY NOTES TO THE PROVISIONS OF THE FINANCE ACT, 2022
CIRCULAR
INCOME-TAX ACT
Finance Act, 2022 – Explanatory Notes to the Provisions of the Finance Act, 2022
CIRCULAR NO. – 23/2022, DATED 3rd NOVEMBER, 2022
AMENDMENTS AT A GLANCE
| Section of Income-tax Act, 1961 | Particulars |
| 2 | Definitions |
| 10 | Incomes not included in total income |
| 11 | Income from property held for charitable or religious purposes. |
| 12A | Conditions for applicability of sections 11 and 12 |
| 12AB | Procedure for fresh registration |
| 13 | Section 11 not to apply in certain cases |
| 14A | Expenditure incurred in relation to income not includible in total income |
| 17 | “Salary”, “perquisite” and “profits in lieu of salary” defined |
| 35 | Expenditure on scientific research |
| 37 | General |
| 40 | Amounts not deductible |
| 438 | Certain deductions to be only on actual payment |
| 50 | Special provision for cost of acquisition in case of depreciable asset |
| 56 | Income from other sources |
| 68 | Cash credits |
| 79 | Carry forward and set off of losses in case of certain companies |
| 79A | No set off of losses consequent to search, requisition and survey |
| 80CCD | Deduction in respect of contribution to pension scheme of Central Government |
| 80DD | Deduction in respect of maintenance including medical treatment of a dependent who is a person with disability |
| 80-IAC | Special provision in respect of specified business |
| 80LA | Deductions in respect of certain incomes of Offshore Banking Units and International Financial Services Centre |
| 92CA | Reference to Transfer Pricing Officer |
| 94 | Avoidance of tax by certain transactions in securities |
| 115BAB | Tax on income of new manufacturing domestic companies |
| 115BBD | Tax on certain dividends received from foreign companies |
| 115BBH | Tax on Income from virtual digital asset |
| 115BBI | Specified income of certain institutions |
| 115JC | Special provisions for payment of tax by certain persons other than a company |
| 115JF | Interpretation in this Chapter (Chapter XI I-BA) |
| 115TD | Tax on accreted income |
| 115TE | Interest payable for non-payment of tax by trust or institution |
| 115TF | When trust or institution is deemed to be assessee in default |
| 119 | Instructions to subordinate authorities |
| 132 | Search and seizure |
| 132B | Application of seized or requisitioned assets |
| 133A | Power of survey |
| 139 | Return of income |
| 140B | Tax on updated return |
| 143 | Assessment |
| 144 | Best judgment assessment |
| 144B | Faceless Assessment |
| 144C | Reference to dispute resolution panel |
| 148 | Issue of notice where income has escaped assessment |
| 148A | Conducting inquiry, providing opportunity before issue of notice under section 148 |
| 148B | Prior approval for assessment, reassessment or recomputation in certain cases. |
| 149 | Time limit for notice |
| 153 | Time limit for completion of assessment, reassessment and recomputation |
| 153B | Time limit for completion of assessment under section 153A |
| 155 | Other amendments |
| 156A | Modification and revision of notice in certain cases. |
| 158AA | Procedure when in an appeal by revenue an identical question of law is pending before Supreme Court |
| 158AB | Procedure where an identical question of law is pending before High Courts or Supreme Court |
| 170 | Succession to business otherwise than on death |
| 170A | Effect of order of tribunal of court in respect of business reorganisation |
| 179 | Liability of directors of private company |
| 194-IA | Payment on transfer of certain immovable property other than agricultural land |
| 194-IB | Payment of rent by certain individuals or Hindu undivided family |
| 194R | Deduction of tax on benefit or perquisite in respect of business or profession |
| 194S | Payment on transfer of virtual digital asset |
| 201 | Consequences of failure to deduct or pay |
| 206AB | Special provision for deduction of tax at source for non-filers of income-tax return |
| 206C | Profits and gains from the business of trading in alcoholic liquor, forest produce, scrap, etc. |
| 206CCA | Special provision for collection of tax at source for non-filers of income-tax return |
| 234A | Interest for defaults in furnishing return of income |
| 2348 | Interest for defaults in payment of advance tax |
| 239A | Refund for denying liability to deduct tax in certain cases |
| 245MA | Dispute Resolution Committee |
| 246A | Appealable orders before Commissioner (Appeals) |
| 248 | Appeal by a person denying liability to deduct tax in certain cases |
| 253 | Appeals to the Appellate Tribunal |
| 255 | Procedure of Appellate Tribunal |
| 263 | Revision of orders prejudicial to revenue |
| 271AAB | Penalty where search has been initiated |
| 271AAC | Penalty in respect of certain income |
| 271AAD | Penalty for false entry, etc., in books of account |
| 271AAE | Benefits to related persons. |
| 271C | Penalty for failure to deduct tax at source |
| 272A | Penalty for failure to answer questions, sign statements, furnish information, returns or statements, allow inspections, etc. |
| 276AB | Failure to comply with the provisions of sections 269UC, 269UE and 269UL |
| 2768 | Failure to pay tax to the credit of Central Government under Chapter XI 1-D or XVI 1-B |
| 276CC | Failure to furnish returns of income |
| 278A | Punishment for second and subsequent offences |
| 278AA | Punishment not to be imposed in certain cases |
| 2858 | Submission of statements by producers of cinematograph films or persons enqaqed in specified activity |
1. Introduction
1.1 The Finance Act, 2022 (hereafter referred to as ‘FA 2022’) as passed by the Parliament, received the assent of the President on 301h March, 2022 and has been enacted as Act 6 of 2022.
1.2 This circular explains the substance of the provisions of the FA 2022 relating to direct taxes.
2. Changes made by FA 2022
2.1 The FA 2022 has,-
(i) specified the existing rates of income-tax for the assessment year 2022-23 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 2022-23; and
(ii) amended sections of the Income-tax Act, 1961 (‘the Act’).
3. Rate structure
3.1 Rates of income-tax in respect of incomes liable to tax for the assessment year 2022-23.
3.1.1 Part I of First Schedule to the FA 22 specifies the rates of income-tax in respect of incomes of all categories of assessees liable to tax for the assessment year 2022-23. These rates are the same as those laid down in Part 111 of the First Schedule to the Finance Act, 2021 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 2021-22. 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 (HUF), 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 | 5% | ||
| Rs. 3,00,001 – Rs. 5,00,000 | 5% | ||
| Rs. 5,00,001 – Rs. 10,00,000 | 20% | 20% | 20% |
| Exceeding Rs. 10,00,000 | 30% | 30% | 30% |
For individuals opting for the concessional taxation regime under section 115BAC of the Act, the rates are as under:
| Total Income (Rs) | Rate of income- tax |
| Up to 2,50,000 | Nil |
| From 2,50,001 to 5,00,000 | 5 |
| From 5,00,001 to 7,50,000 | 10 |
| From 7,50,001 to 10,00,000 | 15 |
| From 10,00,001 to 12,50,000 | 20 |
| From 12,50,001 to 15,00,000 | 25 |
| Above 15,00,000 | 30 |
The amount of income-tax so computed, including in the case of an individual or an HUF exercising option under section 115BAC, or as computed under the provisions of section 111A or section 112 or section 112A of the Act but not having any income under section 115AD of the Act, shall be increased by a surcharge, –
(i) having a total income (including the income by way of dividend or income under the provisions of section 111A and 112A of the Act) exceeding fifty lakh rupees but not exceeding one crore rupees, at the rate of ten per of such income-tax; and
(ii) having a total income (including the income by way of dividend or income under the provisions of section 111A and 112A of the Act) exceeding one crore rupees but not exceeding two crore rupees, at the rate of fifteen per of such income-tax;
(iii) having a total income (excluding the income by way of dividend or income under the provisions of section 111A and 112A of the Act) exceeding two crore rupees but not exceeding five crore rupees, at the rate of twenty-five per of such income tax;
(iv) having a total income (excluding the income by way of dividend or income under the provisions of section 111A and 112A of the Act) exceeding five crore rupees, at the rate of thirty-seven per of such income-tax;
(v) having a total income (including the income by way of dividend or income under the provisions of section 111A and 112A of the Act) exceeding two crore rupees, but is not covered under clause (iii) or (iv) above, at the rate of fifteen per cent of such income-tax.
However, surcharge shall be at the rates provided in (i) to (iv) above for all categories of income without excluding dividend or capital gains in case if the income is taxable under section 115A, 115AB, 115AC, 115ACA and 115E of the Act.
Further, in case an 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) has any income under section 115AD of the Act, the amount of income-tax so computed, shall be increased by a surcharge, –
(i) having a total income exceeding fifty lakh rupees but not exceeding one crore rupees, at the rate of ten per cent of such income-tax; and
(ii) having a total income exceeding one crore rupees but not exceeding two crore rupees, at the rate of fifteen per cent of such income-tax;
(iii) having a total income [excluding the income by way of dividend or income of the nature referred to in clause (b) of sub-section (1) of section 115AD of the Act] exceeding two crore rupees but not exceeding five crore rupees, at the rate of twenty-five per of such income-tax;
(iv) having a total income [excluding the income by way of dividend or income of the nature referred to in clause (b) of sub-section (1) of section 115AD of the Act] exceeding five crore rupees, at the rate of thirty-seven per of such income tax;
(v) having a total income [including the income by way of dividend or income of the nature referred to in clause (b) of sub-section (1) of section 115AD of the Act] exceeding two crore rupees but is not covered in sub-clauses (iii) and (iv), at the rate of fifteen per of such income-tax:
It may be further mentioned that marginal relief shall be available so the total amount payable as income-tax and surcharge on total income exceeding-
(i) fifty lakh rupees but not exceeding one crore rupees shall not exceed the total amount payable as income-tax on a total income of fifty lakh rupees by more than the amount of income that exceeds fifty lakh
(ii) one crore rupees but not exceeding two 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
(iii) two crore rupees but not exceeding five crore rupees shall not exceed the total amount payable as income-tax on a total income of two crore rupees by more than the amount of income that exceeds two crore
(iv) five crore rupees shall not exceed the total amount payable as income-tax on a total income of five crore rupees by more than the amount of income that exceeds five crore
The Health and Education Cess on income-tax shall be levied at the rate of four per cent. on the amount of tax computed inclusive of surcharge.
No marginal relief shall be available in respect of Health and Education Cess.
3.1.3 Co-operative Societies.
Paragraph B of Part I of the First Schedule to the FA 2022 specifies the rates of income tax in the case of every co-operative society as under:-
| 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 or as computed under the provisions of section 111A or section 112 or section 112A of the Act shall be increased by a surcharge at the rate of twelve per cent. of such income-tax in case of a co-operative society having a total income exceeding one crore rupees.
On satisfaction of certain conditions, a co-operative society resident in India has the option to pay tax at 22 per cent. as per the provisions of section 115BAD. Surcharge would be at 10% on such tax.
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 Health and Education Cess on income-tax shall be levied at the rate of four per cent. on the amount of tax computed inclusive of surcharge.
No marginal relief shall be available in respect of Health and Education Cess.
3.1.4 Firms.
Paragraph C of Part I of the First Schedule to the FA 2022 specifies the rate of income-tax as thirty per cent. in the case of every firm.
The amount of income-tax so computed or as computed under the provisions of section 111A or section 112 or section 112A of the Act shall be increased by a surcharge at the rate of twelve per cent. 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 Health and Education Cess on income-tax shall be levied at the rate of four per cent. on the amount of tax computed inclusive of surcharge.
No marginal relief shall be available in respect of Health and Education Cess.
3.1.5 Local Authorities.
Paragraph D of Part I of the First Schedule to the FA 2022 specifies the rate of income-tax as thirty per cent. in the case of every local authority.
The amount of income-tax so computed or as computed under the provisions of section 111A or section 112 or section 112A of the Act shall be increased by a surcharge at the rate of twelve per cent. 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 Health and Education Cess on income-tax shall be levied at the rate of four per cent. on the amount of tax computed inclusive of surcharge.
No marginal relief shall be available in respect of Health and Education Cess.
3.1.6 Companies.
Paragraph E of Part I of the First Schedule to the Act specifies the rates of income-tax in the case of a company.
(i) In case of a domestic company, the rate of income-tax is-
a) twenty-five per of the total income, if the total turnover or gross receipts of the company in the previous year 2019-20 does not exceed four hundred crore rupees;
b) twenty-five per of the total income at the option of the company, if it opts for taxation under section 115BA of the Act;
c) twenty-two per of the total income, at the option of the company, if it opts for taxation under section 115BAA of the Act;
d) fifteen per of the total income, at the option of the company, if it opts for taxation under section 115BAB of the Act;
e) thirty per of the total income, in all other cases.
The tax so computed or as computed under the provisions of section 111A or section 112 or section 112A of the Act 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. Surcharge at the rate of twelve per cent. shall be levied if the total income of the company exceeds ten crore rupees.
However, where the domestic company exercises the option under section 1158AA or section 1158A8, the tax computed shall be enhanced by a surcharge of ten per cent. for all levels of income.
(ii) In the case of a company other than a domestic company, the rate of tax is forty per cent.
The tax so 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 such 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 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,
(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.
Health and Education Cess on income-tax shall be levied at the rate of four per cent. on the amount of tax computed, inclusive of surcharge in the case of every company.
No marginal relief shall be available in respect of Health and Education Cess.
3.2 Rates for deduction of income-tax at source from certain incomes during the financial year 2022-23.
3.2.1 Part II of the First Schedule to the FA 2022 specifies the rates for deduction of income-tax at source during the FY 2022-23 under the provisions of sections 193, 194A, 1948, 19488, 1940, 194L8A, 194L88, 194L8C and 195 of the The rates will remain the same as those specified in Part II of the First Schedule to the Finance Act, 2021, for the purposes of deduction of income-tax at source during the FY 2021-22. For sections specifying the rate of deduction of tax at source, the tax shall continue to be deducted as per the provisions of these sections.
3.2.2 Surcharge.
The tax deducted at source in the following cases shall be increased by a surcharge, as specified under, for purposes of the Union:
The amount of tax so deducted shall be increased by a surcharge,-
(a) in the case of every individual or HUF or 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, being a non resident, calculated,-
(i) at the rate of ten per of such tax, where the income or aggregate of income (including the income by way of dividend or income under the provisions of sections 111A, 112 and 112A of the Act) paid or likely to be paid and subject to the deduction exceeds fifty lakh rupees but does not exceed one crore rupees;
(ii) at the rate of fifteen per of such tax, where the income or aggregate of income (including the income by way of dividend or income under the provisions of sections 111A, 112 and 112A of the Act) paid or likely to be paid and subject to the deduction exceeds one crore rupees but does not exceed two crore rupees;
(iii) at the rate of twenty-five per of such tax, where the income or aggregate of income (excluding the income by way of dividend or income under the provisions of sections 111A,112 and 112A of the Act) paid or likely to be paid and subject to the deduction exceeds two crore rupees but does not exceed five crore rupees;
(iv) at the rate of thirty-seven per of such tax, where the income or aggregate of income (excluding the income by way of dividend or income under the provisions of sections 111A, 112 and 112A of the Act) paid or likely to be paid and subject to the deduction exceeds five crore rupees;
(v) at the rate of fifteen per of such tax, where the income or aggregate of income (including the income by way of dividend or income under the provisions of section 111A,112 and 112A of the Act) paid or likely to be paid and subject to the deduction exceeds two crore rupees, but is not covered under (iii) and (iv) above:
(b) in the case of every co-operative society, being a non-resident, calculated ,-
(i) at the rate of seven per 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 twelve per 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.
(c) in the case of every firm, being a non-resident at the rate of twelve per 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;
(d) in the case of every company, other than a domestic company, calculated,-
(i) at the rate of two per 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 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.
(e) 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 Health and Education Cess.
Health and Education Cess on income-tax shall continue to be levied for the purposes of the Union at the rate of four per cent of income-tax including tax deducted and surcharge, if any. For instance, if the amount of income of a foreign company is Rs. 1,20,00,000/- and tax to be 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/-. Health and Education cess on such amount of tax deducted and surcharge (i.e. Rs. 12,00,000/- + Rs. 24,000/- = Rs. 12,24,000/-) shall be Rs. 48,960/-.
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 2022-23.
3.3.1 Part III of the First Schedule to the FA 2022 specifies the rates for deduction of income-tax at source from “Salaries” or under section 194P of the Act during the FY 2022- 23 and also for computation of “advance tax” payable during the said year in the case of all categories of assessees have been specified in the said Part of the First Schedule to the FA These rates are also applicable for charging income-tax during the financial year 2022-23 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 provided in following paragraphs.
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 limits, rates of tax and slabs of income for various categories remain the same as was in financial year 2021-22.
The rates of tax during the financial year 2022-23 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 | Nil | Nil |
| Rs. 2,50,001 – Rs. 3,00,000 | 5% | ||
| Rs.3,00,001 – Rs. 5,00,000 | 5% | ||
| Rs. 5,00,001 – Rs. 10,00,000 | 20% | 20% | 20% |
| Exceeding Rs. 10,00,000 | 30% | 30% | 30% |
On satisfaction of certain conditions as per the provisions of section 115BAC, an individual or HUF has the option to pay tax in respect of the total income at following rates:
| Total Income (Rs) | Rate |
| Up to 2,50,000 | Nil |
| From 2,50,001 to 5,00,000 | 5 per cent. |
| From 5,00,001 to 7,50,000 | 10 per cent. |
| From 7,50,001 to 10,00,000 | 15 per cent. |
| From 10,00,001 to 12,50,000 | 20 per cent. |
| From 12,50,001 to 15,00,000 | 25 per cent. |
| Above 15,00,000 | 30 per cent. |
The amount of income-tax so computed (including an individual or an HUF exercising option under section 115BAC) or as computed under the provisions of section 111A or section 112 or section 112A of the Act shall be increased by a surcharge, –
(a) at the rate of ten per cent. Of such income-tax, in case of a person having a total income (including any income by way of dividend or income under section 111A, 112 and 112A) exceeding fifty lakh rupees but not exceeding one crore rupees;
(b) at the rate of fifteen per of such income-tax, in case of a person having a total income (including any income by way of dividend or income under section 111A, 112 and 112A) exceeding one crore rupees but not exceeding two crore rupees;
(c) at the rate of twenty-five per of such income-tax, in case of a person having a total income (excluding any income by way of dividend or income under section 111A, 112 and 112A) exceeding two crore rupees but not exceeding five crore rupees;
(d) at the rate of thirty-seven per of such income-tax, in case of a person having a total income (excluding any income by way of dividend or income under section 111A, 112 and 112A) exceeding five crore rupees;
(e) at the rate of fifteen per of such income-tax, in case of a person having a total income (including any income by way of dividend or income under section 111A, 112 and 112A) exceeding two crore rupees but which is not included in (c) or (d) above;
In case of an association of persons consisting of only companies as its members, the rate of surcharge on the amount of Income-tax shall not exceed fifteen per cent.
However, marginal relief shall be available so that the total amount payable as income-tax and surcharge on total income exceeding-
(i) fifty lakh rupees but not exceeding one crore rupees shall not exceed the total amount payable as income-tax on a total income of fifty lakh rupees by more than the amount of income that exceeds fifty lakh rupees
(ii) one crore rupees but not exceeding two 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.
(iii) two crore rupees but not exceeding five crore rupees shall not exceed the total amount payable as income-tax on a total income of two crore rupees by more than the amount of income that exceeds two crore rupees.
(iv) five crore rupees shall not exceed the total amount payable as income-tax on a total income of five crore rupees by more than the amount of income that exceeds five crore rupees.
The Health and Education Cess on income-tax shall be levied at the rate of four per cent. on the amount of tax computed inclusive of surcharge.
No marginal relief shall be available in respect of Health and Education Cess.
3.3.3 Co-operative Societies.
Paragraph B of Part Ill of the First Schedule to the Act specifies the rates of income-tax in the case of every co-operative society. 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 or as computed under the provisions of section 111A or section 112 or section 112A of the Act shall be increased by a surcharge at the rate of seven per cent. of such income-tax in case the total income of a co-operative society exceeds one crore rupees but does not exceed ten crore rupees. Surcharge at the rate of twelve per cent. of such income-tax shall continue to be levied in case of a co-perative society having a total income exceeding ten crore rupees.
On satisfaction of certain conditions, a co-operative society resident in India has the option to pay tax at 22 per cent. as per the provisions of section 115BAD. Surcharge would be at 10 per cent. on such tax.
Marginal relief shall be allowed in the case of co-operative society to ensure that:
(i) 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,
(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.
Health and Education Cess on income-tax shall be levied at the rate of four per cent. of the amount of income-tax computed inclusive of surcharge.
No marginal relief shall be available in respect of Health and Education Cess.
3.3.4 Firms.
Paragraph C of Part Ill of the First Schedule to the FA 2022 specifies the rate of income tax as thirty per cent. in the case of every firm.
The amount of income-tax so computed or as computed under the provisions of section 111A or section 112 or section 112A of the Act shall continue to be increased by a surcharge at the rate of twelve per cent. 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 Health and Education Cess on income-tax shall be levied at the rate of four per cent. on the amount of tax computed inclusive of surcharge.
No marginal relief shall be available in respect of Health and Education Cess.
3.3.5 Local Authorities.
Paragraph D of Part III of the First Schedule to the FA 2022 specifies the rate of income tax as thirty per cent in the case of every local authority.
The amount of income-tax so computed or as computed under the provisions of section 111A or section 112 or section 112A of the Act shall continue to be increased by a surcharge at the rate of twelve per cent. 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.
Health and Education Cess on income-tax shall be levied at the rate of four per cent. of the amount of income-tax and surcharge.
No marginal relief shall be available in respect of Health and Education Cess.
3.3.6 Companies.
Paragraph E of Part III of the First Schedule to the FA 2022 specifies the rate of income tax in the case of a company.
(i) In case of a domestic company, the rate of income-tax is,-
a) twenty-five per of the total income, if the total turnover or gross receipts of the company in the previous year 2020-21 does not exceed four hundred crore rupees;
b) twenty-five per of the total income, at the option of the company, if it opts for taxation under section 115BA of the Act;
c) twenty-two per of the total income, at the option of the company, if it opts for taxation under section 115BAA of the Act;
d) fifteen per of the total income, at the option of the company, if it opts for taxation under section 115BAB of the Act;
e) thirty per of the total income, in all other cases.
The tax so computed or as computed under the provisions of section 111A or section 112 or section 112A of the Act shall continue to 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. Surcharge at the rate of twelve per cent. shall continue to be levied if the total income of the company exceeds ten crore rupees.
However, where the domestic company exercises the option under section 1158AA or section 1158A8, the tax computed shall be enhanced by a surcharge of ten per cent.
(ii) In the case of a company other than a domestic company, the tax rate is forty per cent.
The tax so computed, shall continue to 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 continue to be levied if the total income of such 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 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,
(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.
Health and Education Cess on Income-tax shall be levied at the rate of four per cent of the amount of income-tax computed including surcharge.
No marginal relief shall be available in respect of Health and Education Cess.
3.4 Surcharge on Additional Income-tax.
Where additional income-tax has to be paid under section 92CE, or section 115-QA or section 115TD of the Act, that is to say, on secondary adjustment, or distribution of income by a company on buy-back of shares from shareholders or on accreted income of certain trusts and institutions, the additional tax so payable shall be increased by a surcharge of twelve per cent. of such income-tax.
Health and Education Cess on Income-tax shall be levied at the rate of four per cent. of the amount of income-tax computed including surcharge.
3.5 Surcharge in case of newly introduced sections
For two newly inserted provisions 11588H and 115881, the applicable tax rate is provided in the respective sections and surcharge shall be levied based on status of the taxpayer as is otherwise applicable to such taxpayer.
Health and Education Cess on Income-tax shall be levied at the rate of four per cent. of the amount of income-tax computed including surcharge.
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