Good news to tax payers, those who are having taxable income up to Rs.5,00,000/- can avail tax rebate Rs.5000/- from the financial year 2016-17. The rebate has been increased from Rs.2000/- to 5,000/- which can be avail from the financial year 2016-17. Good news to tax payers, those who are having taxable income up to Rs.5,00,000/- can avail tax rebate Rs.5000/- from the financial year 2016-17. The rebate has been increased from Rs.2000/- to 5,000/- which can be avail from the financial year 2016-17.
Income Tax Under Section 87A, IT act rebate Rs.5000 salaried individuals, taxable income up to Rs.5,00,000/- can avail tax rebate Rs.5000/- from the financial year 2016-17 U/s 87A of IT Act 1961.
Section 87A IT Act : An assessee, those having total income up to Rs.5,00,000 can avail tax rebate of Rs.5,000/- from the assessment year 2017-18(FY 2016-17) under section 87A of Income Tax Act 1961.
The rebate was Rs`2,000/-( Two thousand rupees only) under the Section 87A of Income Tax Act, 1961 was inserted in 2013. To provide grate relief to tax payers, as per the Budget 2016 the rebate has been increased up to Rs.5,000/- (Five thousand rupees only).
Who can avail 87A Tax Rebate Rs.5000/-
If the total income of an assessee for the financial year 2016-17 should not exceeding the Rs.5,00,000/-, then can avail tax benefit up to Rs.5,000/- as per the u/s 87A of 1961 which was amended and newly inserted in the budget 2016. This means, the individuals who are in the 10% tax slab can claim tax benefit of Rs.5,000/- .
The newly inserted amendment under section 87A to avail tax benefit up to Rs.5,000/- will take effect from 1st April, 2017, so assessee can avail tax benefit from the assessment year 2017-18 and coming years. The existing rebate is Rs.2,000/- up to AY 2016-17, the enhance rebateRs.5000/- is from 2017-18 and for subsequent years.
Any resident individual/assessee having total income less than or equal to Rs.5,000/- can get tax rebate upto Rs.5000/- .i.e the rebate will be tax payable subject to the maximum Rs.5000/-. Thus, the amount of rebate shall be 100% of the income or Rs.5,000/-, whichever is less.
Only individual assessee can get the rebate and can’t claim the rebate those HUF, AOP/BOI, Firm and company. Further, not applicable for non-resident individual and resident individual with age of 80 years or more under section 87A of Income-tax Act, 1961.
Clarifications to claim tax rebate Rs.5,000/- U/s 87A
- The rebate Rs.5000/- U/s 87A is applicable to Indian resident individuals Indian only.
- The relief is applicable to all Individuals, only if the Total Income is less than Rs.5,00,000/-
- This Section 87A is w.e.f 1.4.2017 applicable from AY 2017-18 and those who are submitting IT Returns for the Financial Year 2016-17.
- Calculate the Total Taxable Income at first , after making all possible and eligible Deductions 80C and other than 80C(beyond 80C) from your Income.
- Make sure your taxable income is under 10% income tax slab rates.
- Now claim deduct Max of Rs.5000 as Rebate.
- It is deductible from income-tax before calculating education cess.
- The amount of rebate is 100 per cent of income-tax or Rs. 5000, whichever is less.
Sample Calculation to avail Rebate Rs.5,000/- U/s 87A
- First calculate your gross income, assume that your gross income is 4,90,000/-
- Deduct your loss under house property if you have house loan interest.
- Deduct all your deductions like 80C( up to Rs.1,00,000/-) and beyond 80C , let us assume your deduction is Rs.1,00,000/-.
- Now the present net taxable income is 4,90,000-1,00,000=3,90,000/-
- Calculate 10% tax on Rs.1,40,000/- (3,90,000-2,50,000) and it will be 14,000/-.
- Now deduct Rs.5,000/- from 14,000 and it is Rs.9,000/- (14000-5000/-).
- Now calculate Edn cess 3% on 9,000/- and add to it (9000+ 3% of 9,000/-). That’s all…