Tax Rebate Rs. 12,500/- Under section 87 A.The
government has yet not altered the basic exemption limit of Rs 2.50
lakh for some time because the government does not want people to get
out of the tax net and get an exemption from ITR filing. At the same
time, however, successive governments have offered tax breaks for
taxpayers up to a certain income limit. At present, tax exemption is
available for those whose rebate is not more than Rs 5 lakh. This
exemption is available under Section 87A. Let us discuss how this works
for you.
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What is the correct provision?
Section 87A was introduced in the Finance Act 2003 which changed from time to time. If your income is not more than 5 lakh, his tax liability is 12,500.
Anyone
and everyone will not get a chance to get this discount. Although the
basic discount limit is Rs. 2.50 lakhs is applicable to all persons
residing or non-resident and HUF but exemption under section 87A is
available only to one person and even if he is a resident for income tax
purposes. So not all HUFs and non-residents are eligible for this
discount.
Any income should be considered for eligibility criteria?
Taxpayers
have always had the misconception that any income should be considered
for the purpose of being eligible for this discount. This is the income
on which your final tax liability is calculated. So, to begin with, the
income considered for this purpose is the income that came after closing
all the old loss accounts against the current year's income. Similarly,
from net income after this type of loss set-off,
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You
need to reduce all available discounts under different sections of the
VIA chapter. There are cuts for various items under Section VIA such as
Section 80C (LIP, EPF, PPF, ELSS, Tuition Fee, Home Loan Repayment
etc.), Section 80 CCD (NPS), Section 80D (Health Insurance), 80 G
(Donation) ) And 80 TTA and 80 TTB (bank interest).
This exemption can be adjusted against any tax liability and cannot be adjusted
Not that you can get a discount of up to 100 rupees. Twelve Thousand Five Hundred entitled U/s 87A
can be claimed against the tax liability of any nature. This tax
exemption can be claimed in the case of long-term capital gains under section 112,
the general income taxed at the slab rate. Equity-based schemes of
mutual funds in addition to shares.) In addition to short-term capital
gains on listed equity shares,
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How do rebates actually work?
Tax Payers are generally under the impression that if their income does not exceed the minimum threshold amount of Rs. 5 lakhs, he/she will not have to pay any tax. This is because the tax rate for normal income ranges from Rs 2.50 lakh to Rs 5 lakh and the tax liability of 5% on Rs 2.50 lakh comes to exactly Rs 12,500. However, if your income includes taxable income at the rate of 15% (short-term capital gains) or 20% (other long-term capital gains), you will have to pay no more than five lakhs, even if you have income.
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For
the income of your income, one lakh out of 5 lakh listed shares have
one lakh short-term capital gains and the balance is your regular
income. Your tax liability will be Rs. 22,500, including Rs. 7,500 (5%
over 1.50 lakhs) + 15,000 (15% over 1 lakhs of short-term capital
gains). 12500 / - after discount you have to pay Rs. 10,000 / - and cess
even when your income does not exceed the limit of five lakhs.
