Rebate U/s. 87A of the Income Tax Act, 1961

Rebate U/s. 87A of the Income Tax Act, 1961

 

There has been tremendous increase in filing of Income Tax Returns and Tax Compliance. Almost 38 crores PAN are being allotted as per latest Income Tax Department Pan Allotment Statistics and around 6.75 crores of returns has being filed between 01/04/2017 to 31/03/2018. Number of Assesses’s falling within the Range 1 category i.e. Income upto Rs. 5,00,000/- has increased greatly.

 

Thus, Rebate U/s. 87A which is meant for Assessee being an individual resident in India could help small tax payers to cut out on Taxes marginally.

 

Extract of Section 87A of Income Tax Act, 1961 is given below for further understanding:

An assessee being an individual resident in India, whose total Income does not exceed Rupees [Three Lakhs and Fifty thousand], 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 [two thousand five hundred rupees], whichever is less.

 

Thus, it is clear from the above section that Section 87A is applicable to Individuals who is resident in India. Total Income shall mean Total Income from various Sources less deductions under Chapter VIA which should be less than or equal to Rs. 3,50,000/- Rebate under section 87A is applied on total tax before adding Education Cess and Secondary Higher Education Cess/Health and Education Cess as applicable.

F.Y. 2017 – 2018 (A.Y. 2018 – 2019) 

Total Income Tax payable before cess Rebate u/s 87A Tax Payable + 3% Cess
2,75,000  1250  1250 0
3,00,000 2,500 2,500 0
 3,50,000 5,000  2,500  2,500+75

 

F.Y. 2018 – 2019 (A.Y. 2019 – 2020)

Total Income Tax payable before cess Rebate u/s 87A Tax Payable + 4% Cess
2,75,000  1250  1250 0
3,00,000 2,500 2,500 0
 3,50,000 5,000  2,500  2,500+100

 

 

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