Rationalization of rebate allowable under Section 87A
The existing provisions of section 87A provide for a rebate up to Rs. 5000 from the income-tax payable to a resident individual if this total income does not exceed Rs. 5,00,000.
In view of proposed rationalisation of tax rates for individuals in the income slab of Rs. 2,50,000 to Rs.5,00,000,it is proposed to amend Section 87A so as to reduce the maximum amount of rebate available under this section from existing Rs. 5000 to Rs. 2500. It is also proposed to provide that this rebate shall be available to only resident individuals whose total income does not exceed Rs. 3,50,000.
This amendment will take effect from 1st April, 2018 and will, accordingly, apply in relation to the assessment year 2018-19 and subsequent assessment years.Online GST Certification Course by TaxGuru & MSME- Click here to Join
Extract of relevant clause from Finance Bill, 2017
Amendment of section 87A.
38. In section 87A of the Income-tax Act, with effect from the 1st day of April, 2018,—
(a) for the words “five hundred thousand rupees”, the words “three hundred fifty thousand rupees” shall be substituted;
(b) for the words “five thousand rupees” [as substituted by section 46 of the Finance Act, 2016], the words “two thousand five hundred rupees” shall be substituted.