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87A REBATE FOR FINANCIAL YEAR 2013-14

Today we are discussing on Frequently asked question on Rebate under Section 87A  , meaning and benefits of Rebate U/S. 87A .This is the new section Rebate U/S. 87A  introduce by Finance Bill, 2013. Rebate under section 87A is applicable from Financial year  2013-14 and assessment year 2014-15

(I) 87A Rebate for financial year 2013-14 –

Additional tax benefits of Rs 2,000/- or 100 percent of income tax whichever is less is available to an Individual resident in India, if his total income does not exceed Rs 5, 00,000 from financial year 2013-14.

(II) Frequently asked question on Rebate under Section 87A

In which year rebate under section 87A is avaialble.

Rebate U/S. 87A  introduce by Finance Bill, 2013. It is applicable from Financial year  2013-14 and assessment year 2014-15

Who can claim the benefits u/s 87 A?

An Individual resident in India whose total income doesn’t exceeds Rs. 5,00,000/- can avail this benefit. This benefit is also available for super senior citizen but they can’t take the benefit because they are exempted upto Rs. 5,00,000/-.

What is the meaning of total income u/s 87A?

Total Income means the income after deducting Deduction under Chapter VIA.

How much benefits can be claimed u/s 87A?

The Maximum benefit can be available is maximum of 100% of such income tax or Rs. 2,000/- whichever is less

The above section can be well understood with the below given example:

In this example our total tax is more than Rs. 2000/-

Assessee: Individual

A.Y. 2014-15

Gross Total Income Rs. 5,75,000
Less: Deduction under chapter VI A Rs. 85,000
Total Income Rs. 4,90,000
Tax On Total Income Rs. 29,000
Rebate U/s. 87A(Rs. 2,000 or 100% of Tax i.e. Rs. 29,000 whichever is less) Rs. 2,000
Net Tax Rs. 27,000
Add: Edu. & Sec. Edu. Cess@3% Rs. 810
Total Tax Payable Rs. 27,810
Less: TDS Credit & Advance Tax Rs. 20,000
Net Tax Payable Rs. 7,810,

 

Now we take an another example:

In this Example our Total Tax is less than Rs. 2000/-

Gross Total Income Rs. 2,75,000
Less: Deduction under chapter VI A Rs. 61,000
Total Income Rs. 2,14,000
Tax On Total Income Rs. 1,400
Rebate U/s. 87A(Rs. 2,000 or 100% of Tax i.e. Rs. 1,400 whichever is less) Rs. 1,400
Net Tax Rs. Nil
Add: Edu. & Sec. Edu. Cess@3% Rs. Nil
Total Tax Payable Rs. Nil
Less: TDS Credit & Advance Tax Rs. Nil
Net Tax Payable Rs. Nil

 

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