Rebate u/s 87A of IT Act, 2,000 for below 5 L Income
–
Budget 2013 introduced an Income Tax Rebate of Rs. 2,000 for people earning income below Rs. 5 Lakh. It is important to note here that Section 87A does not impact the Income Tax Slabs, and is a Rebate under Section 87A of Rs. 2,000.
—
Section 87A provides for Income Tax Rebate of Rs. 2,000 to Individuals earning Income below Rs. 5 Lakh. This Rebate of Rs. 2,000 would be given from the Total Tax payable by an Individual. It is pertinent to note here that this Rs. 2,000 is to be subtracted from the Total Tax Payable and not from the Total Income of an Individual.
—
—
Section 87A: Income Tax Rebate
As Section 87A provides for Income Tax Rebate, the taxpayer will first compute the Total Tax Payable and then reduce Rs. 2,000 from this Tax payable provided his Total Income is less than Rs. 5 Lakh. If his Total Income is more than Rs. 5 Lakh, the taxpayer won’t be able to claim income tax rebate under Section 87A.
- The Net Taxable Income of Rs. 5 Lakh is the sum total of incomes under all heads i.e. Salary, House Property, Business or Profession, Capital Gains and Other Sources.
- In case there is any loss under any head due to payment of housing loan or for any other reason, such loss would also be reduced from the total income.
- 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 Lakh for an individual to claim income tax rebate of Rs. 2,000 under Section 87A.
—
The above points have been represented below showing the manner of computation:-
–
