Understanding Income Tax Rebate Under Section 87A: Eligibility and Application Process
Income-Tax returns: Taxpayers get rebate under Section 87A — Check here for eligibility, limit and rules, explained
Mint
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Indian taxpayers can claim a rebate under Section 87A, reducing their tax liability based on income levels. This rebate allows individuals earning up to ₹12 lakhs to benefit from significant tax reductions, with specific rules for eligibility and application outlined for first-time filers.
- 01Rebate under Section 87A reduces tax payable for middle to low-income earners.
- 02Under the old tax regime, a rebate of ₹12,500 is available for incomes up to ₹5 lakhs.
- 03The new tax regime offers a rebate of ₹60,000 for incomes up to ₹12 lakhs.
- 04Marginal relief applies for incomes slightly exceeding ₹12 lakhs, reducing overall tax liability.
- 05Certain income types, such as capital gains and earnings from lotteries, are ineligible for rebate.
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All Indian taxpayers must file their income tax returns (ITR), with the e-filing process becoming more user-friendly over time. The rebate under Section 87A allows middle to low-income earners to reduce their tax payable. Under the old tax regime, individuals with an income of up to ₹5 lakhs can claim a rebate of ₹12,500, while the new regime permits a rebate of ₹60,000 for incomes up to ₹12 lakhs. This rebate is applied to the total tax before adding a 4% health and education cess. To claim the rebate, taxpayers must report their total taxable income in the updated ITR forms — ITR-2 and ITR-3. Marginal relief is available for those whose income slightly exceeds ₹12 lakhs, effectively lowering their tax liability. However, this rebate is not applicable for long-term and short-term capital gains, special income types, or for companies and Hindu Undivided Families (HUFs). Understanding these distinctions is crucial for effective tax planning.
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This rebate can significantly reduce tax liabilities for low to middle-income earners, allowing them to retain more of their income. Taxpayers should ensure they understand their eligibility to maximize their benefits.
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