CBDT clarifies process of opting concessional rates of tax, Sec 115BAC
CBDT has issued Circular C1 of 2020 dated13.04.2020. It clarifies the process of exercising of option by a taxpayer with regard to deduction of tax at source if he/she opts for the concessional rates of tax as per section 115BAC.
Employee to an intimate employer of the intention to opt for new concessional rates. Intimation so given will be applicable for the year & can’t be modified. However, an employee has the right to exercise such option or continue with the earlier scheme. He can decide it at time of filing ITR.
Circular C 1 of 2020
F. No. 370142/13/2020-TPL
Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
New Delhi, April 13,2020
Clarification in respect of an option under section IISBAC of the Income-tax Act, 1961
Section IISBAC of the Income-tax Act, 1961 (the Act), inserted by the Finance Act, 2020 w.e.f. the assessment the year 2021-22, inter alia, provides that a person, being an individual or a Hindu undivided family having income other than income from business or profession”, may exercise the option in respect of a previous year to be taxed under the said section IISBAC along with his return of income to be furnished under sub-section (I) of section 139 of the Act for each year. The concessional rate provided under section IISBAC of the Act is subject to the condition that the total income shall be computed without specified exemption or deduction, setoff of loss and additional depreciation.
2. Representations expressing concern regarding tax to be deducted at source (TDS) has been received stating that as the option is required to be exercised at the time of filing of the return, the deductor, being an employer, would not know if the person, being an employee, would opt for taxation under section IISBAC of the Act or not. Hence, there is a leak of clarity regarding whether the provisions of section IlSBAC of the Act are to be considered at the time of deducting tax.
3. In order to avoid genuinely hardship in such cases, the Board, in the exercise of powers conferred under section 119 of the Act, hereby clarifies that an employee, having income other than the income under the head “profit and gains of business or profession” and intending to opt for the concessional rate under section 1iSBAC of the Act may intimate the deductor, being his employer, of such intention for each previous year and upon such intimation, the deductor shall compute his total income, and make TDS thereon in accordance with the provisions of section IISBAC of the Act. If such intimation is not made by the employee, the employer shall make TDS without considering the provision of section 11SBACof the Act.
4. It is also clarified that the intimation so made to the deductor shall be only for the purposes of TDS during the previous year and cannot be modified during that year. However, the intimation would not amount to exercising an option in terms of sub-section (S) of section J ISBAC of the Act and the person shall be required to do so along with the return to be furnished under sub-section (J) of section 139 of the Act for that previous year. Thus, option at the time of filing of return of income under sub-section (J) of section J 39 of the Act could be different from the intimation made by such employee to the employer for that previous year.
5. Further, in case of a person who has income under the head “profit and gains of business or profession” also, the option for taxation under section J J SBAC of the Act once exercised for a previous year at the time of filing of return of income under sub-section (\) of section 139 of the Act cannot be changed for subsequent previous years except in certain circumstances.
Accordingly, the above clarification would apply to such person with a modification that the intimation to the employer in his case for subsequent previous years must not deviate from the option under section IISBAC of the Act once exercised in a previous year.
Deputy Secretary (TPL)-I
Copy to the:
I. PSI OSD to FM/ PS/OSD to MoS(F).
2. PS to the Finance Secretary.
3. Chairman and Members, CBDT.
4. Joint Secretaries/ CsIT/ Directors/ Deputy Secretaries/ Under Secretaries, CBDT.
5. C&AO of India (30 copies).
6. JS & Legal Adviser, Ministry of Law & Justice. New Delhi.
7. Institute of Chartered Accountants of India.
8. CIT (M&TP). Official Spokesperson of CBD.
9. Principal DOlT (Systems) for uploading on the official website
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