The Union Budget 2017-18 proposed to be reduced to this rebate under section 87A to Rs. 2,500, where the total taxable income does not exceed Rs. 3,50,000 from AY 2018-19.
Know all about Section 87A: Income Tax Rebate allowed to Individuals in the following section.
Financial Year
|
Rebate Amount
|
Applicable only if income less than
|
2017-18
|
Rs. 2500
|
Rs. 3.50 Lakhs
|
Section 87A of Income Tax Act, 1961 offers a Tax Rebate to Individuals earning Income below the specified limit. This 87A Rebate would be given from the Total Tax payable by an Individual. The Rebate under section 87A is relevant to note here that this rebate is to be subtracted from the Total Taxable income and not from the Total Income of an Individual. Learn the essentials of Income Tax Rebate. Know all about Section 87A. Check Tax Rebate for the Individuals for Assessment year 2017-18. For more details regarding Income Tax Rebate under Section 87A, read the full article.
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What is Income Tax Rebate?
A Tax rebate is an amount paid by way of reduction, return, or refund on what has already been paid or contributed. The Income Tax Rebate in India is allowed for Individuals whose income falls under the tax slabs. Tax rebate rates are updated for every financial year as per the directions of the Indian government. The modifications made in the rebate structure are announced in Union Budget of the respective year.
Eligibility for Income Tax Rebate
With a view providing tax relief to the individual assesses who are in lower income bracket a refund is provided for under Section 87A.
The rebate will be available if the assessee satisfies the following eligibilities.
1. The Taxpayer is a resident individual( may be an ordinary resident or not ordinary resident).
2. The Total Income or taxable income (i.e. gross total income minus deductions under Section 80C to 80U) is Rs.3,50,000/- or less.
Income Tax Rebate Key Features
The following are the salient features of Income Tax Rebate u/s 87A AY 2017-18.
· Under Section 87A Tax Rebate is only available to Individuals. All categories of Individuals whether female or male or Senior Citizens are eligible to claim Income Tax Rebate as per Section 87A. The taxpayer under the class like HUF, LLP, Partnership Firms, Companies, LLP, etc. is not eligible to claim Income Tax Rebate under this section.
· Income Tax Rebate u/s 87A is only available to Resident Individuals and not to Non-Resident Individuals.
· For Super Senior Citizen (Aged above 80 years) There is no benefit of this Rebate as their Income up to Rs. 3,50,000/- is already exempted from the levy of Income Tax.
Note: Rebate under Section 87A is not available for the case of a non-resident individual, resident or non-resident HUF/ AOP/ BOI or any taxpayer other than a resident individual.
Tax Rebate for Senior Citizens
The Income Tax Act, 1961 has made provisions for tax rebates for senior citizens(aged over 65 years). The Section 88B contains all details about such tax rebates. But, the most significant fact about such rebates is that the individual concerned is entitled to receive rebates till Rs. 20,000/- depending upon the amount of tax payable on him.
Note: Rebate benefits u/s 87Ais not available to super senior citizens.
Income Tax Rebate Calculation
As Section 87A provides for Income Tax Rebate, the assessee will first compute the Total Tax Payable and then reduce Rs. 2,500/- from this Tax payable provided his Total Income is less than Rs. 3,50,000/-. If taxpayer’s Total Income is more than Rs. 3,50,000/-, then he won’t be able to claim income tax rebate under Section 87A.
· The Net Taxable Income of Rs. 3,50,000/- is the total of incomes under all heads i.e. House Property, Salary, Capital Gains, Business or Profession, and Other Sources.
· In case, there is any loss under any head due to the payment of housing loan or for any other reason, such loss would also be deducted from the total income.
· Tax Deductions from Section 80C to Section 80U under Chapter VI-A would also be allowed, and the resultant figure i.e. Total Income should be less than Rs. 3,50,000/- for an individual to claim income tax rebate of Rs. 2,500/- under Section 87A.