Curious About Tax Rebates? Understanding Section 87 of the Income Tax Act

Understanding Rebate Under Section 87 of the Income Tax Act

I want to know about the rebate under section 87 of the Income Tax Act. What are the provisions outlined in section 87, and how is the rebate calculated?

Regards

I believe you are referring to Section 87A, which was recently introduced in the Income Tax Act this year. According to this section, an assessee who is an individual resident of India, with income up to ₹5 lakhs, will receive a tax credit of ₹2000. Taxpayers falling under the income slab of ₹2 to ₹5 lakhs will be eligible for a tax rebate of ₹2000 at the time of filing their return.

Regards

Thanks for your response. Many of us are not aware of this provision. Please elaborate more on this, such as:

- Applicable from which Assessment year?
- How can the assessee take benefit of it?
- How will the Tax credit be given?
- Whether at the time of filing the IT Returns, one can deduct it (if there is still some Tax amount > Rs. 2000, still payable)?
- Or if it is already deducted as TDS, can one get a REFUND after filing returns?

Please do answer the above queries.

Warm regards.

Applicable from AY 2014-15.

How Can the Assessee Take Benefit of It?

It is a tax rebate and not a tax exemption. At the time of filing the return, one has to deduct the rebate amount from the tax payable. The IT authority will make provision in the form of return for tax payable after the rebate.

How Will the Tax Credit Be Given?

Answered as above.

Deduction at the Time of Filing IT Returns

It is not a payment. It is a rebate in tax. From the tax amount with surcharge, there will be a deduction of this rebate.

Refund After Filing Returns

Of course.

Regards

I would like to know if the amount of Rs. 2000/- is deducted from the employee at the time of TDS deduction, or if it is refunded as a claim from IT after we file the return.

Regards,