Are You Eligible For Income Tax Rebate U/S 87A

section-87A-new-tax-credit-rs-2000In budget 2013-14, taxpayers’ focus was on Section 87A. This section is added in Income Tax act 1961 for the benefit of common man. Section 87A states that taxpayer with an income of less than 5 lakhs will be eligible to get a tax rebate of Rs. 2,000.

Please understand clearly, it is a tax rebate and not an exemption.

It will be available to individual assessee falling under category of general and senior citizen only. No HUF will receive this rebate.

How To Calculate Tax Rebate U/S 87A?

This tax rebate will be available to those whose income is less than Rs. 5 lakhs and fall under the above-mentioned category. Here income means gross income minus deductions under section VI. If your net income is below Rs. 5 Lakh, you will receive a relief of Rs. 2,000 in your total tax payments.

Example

Suppose you are a general citizen with a salary Rs. 5 Lakhs. You get deductions of Rs. 50000 under Sec VI. Hence, now net income is Rs. 4,50,000 that means you are liable to receive this rebate. Your actual tax payment for FY 2013-14 for the above income will be as under.

Tax plus 3% surcharge = Rs. 25,750

Tax payable after rebate = Rs. 23,750

You don’t need to do any procedure for this. Your rebate will be deducted when you file your returns.

Section VI

There are many deductions available to individuals under Section VI. It includes investments and certain expenses.

Sections

Investment/Expense

Deduction for individuals

Deductions for senior citizens

80C

-          Life insurance

-          Equity linked saving scheme

-          FDs with tax saving

-          Employee Provident fund and VPF

-          Public Provident fund

-          National saving certificate

Not exceed Rs. 1,00,000 in total

Not exceed Rs. 1,00,000 in total

80CCC

-          Pension plan from insurance companies

80CCD

-          Contribution for Pension plan by Central Government employees

80D

-          Medical insurance premium (family members included)

Max Rs. 15,000

Max Rs. 20,000

-          Additional for parents

Max Rs. 30,000

Max Rs. 40,000

80DD

Medical treatment for dependent with disability

-         If disability more than 80%

Max Rs. 1,00,000

Max Rs. 1,00,000

-         For others

Max Rs. 50,000

Max Rs. 50,000

80DDB

Medical treatment of specified disease (dependent relative included)

Max Rs. 40,000

Max Rs. 60,000

80E

Interest on Education loan

Entire interest

Entire interest

80G

Donation/Charity

 

 

80GGA

Donation for Scientific and rural development

 

 

80GGC

Donation to Political parties

 

 

80GG

Rents paid in absence of HRA

 

 

80U

Disabilities

-         More than 80%

Rs. 1,00,000

Rs. 1,00,000

-         others

Rs. 50,000

Rs. 50,000

  • Prabhakar Malgate

    Plz read as ” Chapter VI ” wherever Section VI.

  • Rajat Kanti Sinha

    this is wrong information, in 87A nowhere it is mentioned about age limit i.e senior citizen

  • g v waran

    this is wrong calculation under section 87 A
    10 % of net income – rebate Rs.2000
    from the total tax after rebate
    then 3 % cess
    total
    clarify

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