INDIA Law and Practice Contributed by: Rishabh Shroff, Kunal Savani and Chirag Shah, Cyril Amarchand Mangaldas
• individuals who earned between INR250,001 and INR500,000 paid 5% of income in excess of INR250,000; • individuals who earned between INR500,001 and INR1 million paid 20% of income in excess of INR500,000 plus INR12,500; and • individuals who earned above INR1 million paid 30% of income in excess of INR1 million plus INR112,500. In the new regime (excluding applicable surcharges and cess): • individuals who earn up to INR400,000 pay no tax; • individuals who earn between INR400,001 and INR800,000 pay 5% of income in excess of INR400,000; • individuals who earn between INR800,001 and INR1.2 million pay 10% of income in excess of INR800,000 plus INR20,000; • individuals who earn between INR1,200,001 and INR1.6 million pay 15% of income in excess of INR1,200,001 plus INR60,000; • individuals who earn above between INR1,600,001 and INR2 million pay 20% of income in excess of INR1.6 million plus INR120,000; • individuals who earn above between INR2,000,001 and INR2.4 million pay 25% of income in excess of INR2 million plus INR200,000; and • individuals who earn above INR2.4 million pay 30% of income in excess of INR2.4 million plus INR300,000. Moreover, for a taxpayer whose total income exceeds INR5 million but is less than INR10 million, an addi - tional surcharge of 10% of the tax is levied. For per - sons whose total income is more than INR10 million but does not exceed INR20 million, a 15% surcharge on income applies. For income exceeding INR20 mil - lion but not exceeding INR50 million, a 25% surcharge is leviable and for income exceeding INR50 million a 37% surcharge is leviable. However, for taxpayers opting for the new regime, the surcharge has been capped at 25% for income exceeding INR20 million. The taxpayers additionally have to pay a health and education cess at the rate of 4% of the income tax and the applicable surcharge. Additionally, the sur -
charge on certain capital gains income and dividends has been capped at 15%. Further, there are no estate, inheritance or generation - al-skipping taxes in India. There is also no separate gift tax which is levied in India. Under the ITA, income of trusts registered for charita - ble purposes are exempt from tax subject to certain conditions. For updates on taxation on trusts regis - tered for charitable purposes under the ITA, see 10.1 Charitable Giving . For taxation of private trusts, see 3.1 Types of Trusts, Foundations or Similar Entities . 1.2 Exemptions Under the provisions of the ITA, any transfer of a capital asset by an individual or a Hindu Undivided Family (HUF) under a gift or a Will is exempt from capital gains tax. However, Section 56 (2)(x) of the ITA, an anti-avoidance provision, stipulates that any person who received money or property, for no con - sideration or for a consideration which is less than fair market value, then such difference between fair mar - ket value and consideration would be subject to tax under the head of “Income from Other Sources”. The term “property” under the said provision shall mean immovable property being land or building or both, shares and securities, jewellery, archaeological col - lections, drawings, paintings, sculptures, any work of art or bullion and virtual digital assets. Accordingly, if a gift was made to a third party, then it would be taxed under the head of “income from other sources”, akin to a gift tax. However, to provide benefit of tax exemption to genu - ine cases, inter alia, an exemption from taxation for gifts made to “relatives” was provided. The term “rela - tives” is defined under Section 56 (2)(x) of the ITA. The following individuals would qualify as relatives for the purposes of the ITA: • in the case of an individual: (a) spouse of the individual; (b) brother or sister of the individual (or their spouse);
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