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Query: What is rebate u/s 87A

Category: Investments

Answer: Rebate u/s 87A is a provision for giving tax relief to the low bracket income earners. From AY 2020-21 onwards following are the provisions related to rebate u/s 87A:- 1. This rebate can be claimed only by resident individual. 2. He must have his taxable income after claiming deduction u/s chapter VIA (Section 80) not more than 5 lacs 3. This rebate is reduced from tax liability before adding 4 % health & education cess. 4. This rebate is a not a refund but a relief so the amount of rebate will be capped to total tax liability for example if a person has total taxable income of 4 lacs , his tax liability will come as 7500 (5% on 150000), so the rebate u/s 87A would be allowed only 7500. To many taxpayers this rebate is wrongly understood as they think that now the tax free slab for AY 2020-21 is 5 lacs, which is wrong for other than Resident Individuals for income upto 5 lacs.

Date Posted 13-Dec-2019
Posted By Kumar Prakash
Views: 643

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