Income Tax Rebate

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INCOME TAX REBATE

• POWERED BY http//www.taxqueries.in/

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CONTENTS

• Income Tax Rebate
• Rebate u/s 87A For FY 
• Eligibility for Income Tax Rebate
• Income Tax Rebate Key Features
• Income Tax Rebate Calculation

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 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.

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Income Tax Rebate Under Section 87A 

• The rebate u/s 87A for the Financial year
  2016-17 is Rs. 5,000/-  in a case of an
  individual resident of India whose total taxable
  income does not exceed Rs. 5,00,000.
• 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. 

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Rebate u/s 87A For FY 

• The Income Tax Rebate under Section 87A for AY
  2018-19 is allowed as per the following
  schedule for different financial years

Financial Year Rebate Amount Applicable only if income less than
2017-18 Rs. 2500 Rs. 3 Lakhs
2016-17 Rs. 5000/- Rs. 5 Lakhs
2015-16 Rs.2000/- Rs. 5 Lakhs
2014-15 Rs. 2000/- Rs. 5 Lakhs
2013-14 Rs. 2000/- Rs. 5 Lakhs
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Tax Rebate in India

• Section 87A of the Income Tax Act, 1961 was
  inserted by the Finance Act, 2013 with effect
  from 01-04-2014.
• The section 87A provides for an income tax
  rebate up to Rs. 2000/-(F.Y 2013-14) to
  Individuals having Taxable Income not exceeding
  Rs. 5,00,000/-.
• In Union Budget 2016, the Income Tax Rebate has
  been increased from Rs. 2000/- to Rs. 5,000/- and
  would be applicable from F.Y. 2016-17 onwards.
• The Rebate of Rs. 5,000/- would be given from
  the Total Tax payable by an Individual. It is
  pertinent to note here that this Rs. 5,000/- is
  to be subtracted from the Total Tax Payable and
  not from the Total Income of an Individual.

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Eligibility for Income Tax Rebate

• The rebate will be available if the assessee
  satisfies the following eligibilities.
• The Taxpayer is a resident individual( may be an
  ordinary resident or not ordinary resident).
• The Total Income or taxable income (i.e. gross
  total income minus deductions under Section 80C
  to 80U) is Rs. 5,00,000/- or less.

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Income Tax Rebate Key Features

• Income Tax Rebate u/s 87A is only available to
  Resident Individuals and not to Non-Resident
  Individuals.
• From Financial Year 2016-17 onwards the total
  rebate allowed under section 87A would be Rs.
  5,000/- or the total tax is payable (whichever is
  less).
• Income Tax Rebate under section 87A -Rs. 5,000/-
  is allowed before the levy of Education Cess and
  Secondary High Education Cess. 
• For Super Senior Citizen (Aged above 80 years)
  There is no benefit of this Rebate as their
  Income up to Rs. 5,00,000/- is already exempted
  from the levy of Income Tax.

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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. 5,000/- from this Tax
  payable provided his Total Income is less than
  Rs. 5,00,000/-.
• If taxpayers Total Income is more than Rs.
  5,00,000/-, then he wont be able to claim income
  tax rebate under Section 87A.

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• The Net Taxable Income of Rs. 5,00,000/- 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. 5,00,000/- for an individual to
  claim income tax rebate of Rs. 5,000/- under
  Section 87A.

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