May 062013

Budget 2013 has introduced new Section 87A. This Section gives Extra Income tax rebate of Rs 2000/- to Resident Individuals whose Total Income is less than Rs 5,00,000/-

Conditions to be fulfilled for availing Extra Income tax rebate:

1) Extra rebate u/s 87A is only available to Individuals. This rebate is not available to HUF’s or NRI‘s or corporate or partnership firm.

2) Rebate u/s 87A is available if total income does not exceed Rs 5,00,000/-.

3) Rebate is available to Resident Indians.

FAQ’s on extra rebate of Rs 2000/- u/s 87A.

Que: What is the amount of rebate?

Ans: Extra Rebate of Rs 2000/- is available if Total Income of Individuals is below Rs 500,000/-. This amount will be allowed from Total Income Tax so computed.

Que:  What is the effective date for the Sec 87A rebate ?

Ans: Rebate of Rs 2000/- u/s 87A is available from Financial Year 2013-2014 (Assessment year 2014-2015)

Que : How is calculation made u/s 87A?

Ans: Rebate is allowed to the tune of actual Income tax payable. In case Income tax payable is NIL , no extra rebate/ or Income Tax refund is allowed.

Case I Case II Case III
Total Income 250,000 250,000 250,000
Less: Deduction u/s 80C -50,000 -30,000 -25,000
Net Income 200,000 220,000 225,000
Tax Payable Nil 2000 2500
less: Rebate u/s 87A Nil -2000 -2000
Net Tax Payable Nil Nil 500

Que: My residential Status is NRI. Can I claim rebate u/s 87A?

Ans: Rebate is available only to Individuals who are resident of India. Hence NRI can not claim rebate u/s 87A.

Que: My Income is  Rs 600,000/- and I have invested Rs 100,000/-. Can I claim Rebate u/s 87A?

Ans: Yes, You can claim rebate u/s 87A since, your gross total income has not exceed Rs 500,000/-. See here latestIncome Tax Slab

Que: Can Senior Citizen Claim rebate u/s 87A?

Ans: Yes, Senior Citizen can claim rebate, if their total income is less than Rs 5 lac.

In  case Total Income is more than Rs 5,00,000/-, Rebate u/s 87A is not available.

Please note Super Senior Citizen ( above 80 years old) are already exempt from Income tax upto income of Rs 5 lac as per Income tax rates.

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