Final Tax Regime (FTR) – Part I
Final Tax Regime (FTR) Definition
The final tax regime (FTR) is the method of taxation where tax deducted is considered as a full and final discharge of the tax liability.
Income from the final tax regime is not reduced by any deductions or allowances nor any tax credit is given or losses are adjusted.
The income under the final tax regime is not included in the total income.
Return on income is required to be filed where the only source of income is the Final Tax Regime (FTR) including the filing of wealth statement and statement of foreign income and assets if required.
For non-active taxpayers rates shall be double i.e. 100% increase in certain cases. However, excess tax collection shall be adjusted or refundable if a person becomes a filer within 45 days of receipt of the provisional assessment order or before the finalization of the provisional assessment order under the 10th schedule.
List of applicable income under the Final Tax Regime and relevant sections.
|Income under Final Tax Regime
|Prizes and winning
|Exports including start-ups and online marketplace
|Export of services
|Section 154 A
|Petrol Pump Operators
|Section 156 A
|Foreign produced commercials
|Section 152 (1BA)
|Sale of right to collect tolls
|Section 236A (3)
|Tax on builders and developers
|Section 7C, 7D, 100D
|Tax on profit in specified cases
|Clauses 5A, 5AA, and 5AB of Part II 2nd Schedule
|Small and medium size enterprise (SMEs)
|Section 2(59A), 100E and 14th schedule
Dividend Income – Section 150
Tax rates on dividend income as full and final tax liability are as under:
|Dividend in case of corporate and non-corporate shareholders
|Dividend paid by independent power producers
|Dividend received from a company where no tax is payable by such company due to exemption, carry forward of loss or tax credits
|Dividend received from special purpose vehicle not under REIT scheme
Exempt dividend income
- Inter-corporate dividend income received from group companies is entitled for group taxation.
- Dividend income from a corporate agricultural enterprise.
- Dividend received from a company being builder or developer under 11th schedule.
Prizes and Winning – Section 156
- 20% on a prize for winning a quiz or prize offered by companies for sales promotion.
- 15% on prize bond and cross-word puzzle.
If the prize is not in cash, then the fair market value shall be calculated for tax collection, e.g. winning a car in a tv program.
Petrol Pump Operators – Section 156A and Division VIA Part III 1st Schedule
12% final tax shall be deducted on payment of the gross amount of commission or discount allowed to the petrol pump operator by every person selling petroleum products.
If a petroleum agent or distributor is registered under sale tax then no withholding tax shall be deducted from the supply of petroleum products.
Payment for foreign-produced commercials – Section 152 (1BA)
Payments made for foreign-produced commercials regarding advertisement on TV or any other media to a non-resident person (either directly or through an agent or intermediary), tax shall be deducted @ 20% as final tax.
Sale of right to collect tolls – Section 236A and Division VIII Part IV 1st Schedule
On the sale of immovable property by auction Advance Tax @5% shall be collected. For the sale of other property or goods through public auction or tender advance tax @10 % shall be collected on the sale value from the purchaser.
Sale by public auction or tender includes renewal of license previously sold by public auction or auction by tender. Both these taxes are adjustable.
Tax @10% final tax shall be collected on the sale of a right to collect tolls.