What is 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
Tax Rebate Rs.5,000/-U/s 87A for F.Y.2016-17
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.
Eligibility for
Income Tax Rebate
With a view providing tax relief to
the individual assesses who are in lower income bracket a refund is provided
for under Section 87A.
The rebate will be available if the
assessee satisfies the following eligibility.
1.
The
Taxpayer is a resident individual ( may be an ordinary resident or not ordinary
resident).
2.
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.
Income Tax Rebate Key
Features
The following are the salient
features of Income Tax Rebate u/s 87A.
·
Under
Section 87A Tax Rebate is only available to Individuals. All categories of
Individuals whether female or male or Senior Citizens are eligible to claim
Income Tax Rebate as per Section 87A. The taxpayer under the class like
HUF, LLP, Partnership Firms, Companies, LLP, etc. is not
eligible to claim Income Tax Rebate under this section.
·
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 of Rs. 5,000/- is allowed before the levy of Education Cess and
Secondary High Education Cess. In other words, Education Cess and
SHEC-Secondary High Education Cess would be levied on the tax payable after
allowing for Income Tax Rebate of Rs. 5,000/-.
·
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.
Note: Rebate under
Section 87A is not available for the case of a non-resident individual,
resident or non-resident HUF/ AOP/ BOI or any taxpayer other than a resident
individual.
Tax Rebate for Senior
Citizens
The Income Tax Act, 1961 has made provisions for tax rebates
for senior citizens(aged over 65 years). The Section 88B contains all details
about such tax rebates. But, the most significant fact about such rebates is
that the individual concerned is entitled to receive rebates till Rs. 20,000/-
depending upon the amount of tax payable on him.
Note: Rebate
benefits u/s 87Ais not available to super senior citizens.
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 taxpayer’s Total Income is more than Rs. 5,00,000/-, then he
won’t be able to claim income tax rebate under Section 87A.
·
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.
Download Automated Excel BasedMaster of Form 16 Part B with Synopsis of 24Q & 26 Q for F.Y.2016-17 &A.Y.2017-18 as per the Finance Budget 2016-17.[This Excel Based Software can prepare at a time 50 employees Form 16 Part B with Synopsis of Challan 24Q & 26 Q this synopsis can be send to the NSDL and they can up load the 24Q or 26 Q to the Income Tax Department]
