As per the amended provisions of Section 87A of the Income Tax Act,  from AY 2020-21 i.e. FY 2019-20 onwards a tax rebate to the extent of Rs. 12,500/- is available to individual assesses being resident in India whose total income during the year does not exceed Rs.5 Lacs.

Example: Mr. A resident of India is 82 years old and has the following incomes during FY 2019-20. The Section 87A works as below:-

Total Income Amount (Rs.)
Income under the head ‘Salaries’(Pension Income) 240000
Income under the head ‘House Property’ (Rent) 180000
Interest on Fixed Deposits with Bank 45000
Interest on Saving Account with Bank 15000
Gross Total Income 480000
Less: Deduction u/s 80TTB 50000
Total Income 430000
Tax on Total Income
On Rs.2,50,000/- Nil
On Rs.1,80,000/- @5% 9000
Cess @ 4% 360
Total Tax 9360
Less: Rebate u/s 87A (Lower of Total Tax or Rs.12500) 9360
Net Tax Payable Nil

Now the question arises, whether the assessee can furnish a declaration in Form 15H for non-deduction of TDS on his income. The CBDT has come up with Notification No. 41/2019/F. No. 370142/5/2019-TPL dated 22 nd May, 2019 wherein it has inserted a provision in Appendix II, in Form No. 15H in Part II, in Note No. 10 which reads as below:-

“Provided that such person shall accept the declaration in a case where income of the assessee, who is eligible for rebate of income-tax under section 87A, is higher than the income for which declaration can be accepted as per this note, but his tax liability shall be nil after taking into account the rebate available to him under the said section 87A.”.

Meaning thereby in case after the rebate u/s 87A the tax liability of the assessee reduced to Nil as in the aforesaid example, he can now furnish a declaration in Form 15H.

Concluding Remarks

Timely issue of such a beneficial notification by the CBDT is a welcome move. It would save the eligible assessee from the hardship of unnecessary tax deduction and consequential compliance burdens to get back the refund. Simultaneously it would also save the time and energy at the department level.

Don’t forget to check rebate u s 87a.

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October 2021