Section 87A – Income Tax Rebate

A new section 87A by Finance bill 2013 has been introduced for Income Tax Deduction of Rs. 2000/- for Assessment Year 2014-15.  This rebate can be availed Tax payer/Assessee under section 87A.

The proposed new section 87A seeks to provide that an assessee, being an individual resident in India, whose total income does not exceed Rs. 5,00,000/- , shall be entitled to a deduction, from the amount of income-tax (as computed before allowing the deductions under Chapter VIII of the Income-tax Act) on his total income with which he is chargeable for any assessment year, of an amount equal to hundred per cent of such income-tax or an amount of Rs. 2,000/- whichever is less.

Points:

1.   These amendments will take effect from 1st April, 2014 and will, apply in relation to the assessment year 2014-15 and subsequent assessment years.

2.   Rebate is available  only to individuals

3.   No rebate to Non Resident.

4.   If the total tax payable is less than Rs. 2000/-, rebate is restricted to “total tax payable”.

5.   Rebate benefit is not applicable to a super senior citizen, since he is already fully exempted up to Rs. 5 lakh.