Tax Rebate is that special word which brings smile on the face of the tax payers! But unfortunately, many people got confused while claiming tax rebate correctly while filing Tax return. This is mainly because this section has been amended many time and hence create confusion in the mind of the taxpayers. Hence today I choose this topic as now return filing season has already been started, so little clarity on this topic will definitely be helpful for all the taxpayers.
1. Assessee must be a Resident Individual
Note: Please note that Non Resident are not eligible for tax rebate and this rebate is only available to Individual assesses only.
2. His Total Income after Deductions (under Chapter VIA) doesn’t exceed Rs 5 lakhs.
3. The rebate is limited to Rs 12,500. This means that if the total tax payable is lower than prescribed limit, then that amount will be the rebate under section 87A.
4. This rebate is applied to the total tax before adding the Education Cess (4%)
|Particulars||Mr. X||Mr. Y|
|Rebate u/s 87A||12,450||NIL|
|Total Tax payable||NIL||13,832|
Note: the tax is calculated based on old slab rate.
“An assessee being an individual resident in India, whose total Income does not exceed Rupees Five Lakhs, shall be entitled to a deduction, from the amount of income tax (as computed before allowing deductions under this chapter) on his total income with which he is chargeable for any assessment year, of an amount equal to hundred per cent of such income-tax or an amount of Rs. Twelve thousand five hundred, whichever is less.”
I hope the above article will help you at the time of filing your tax return.
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(Republished with Amendments by Team Taxguru)