What is a section 87A tax rebate? With Automatic Income Tax Form 16 for the F.Y.2021-22

what is the form 16

 What is a section 87A tax rebate? Under the Income Tax Law, all individuals and legal entities are required to pay income tax if their income exceeds the income tax threshold. However, income tax laws provide for an allowance under section 87A that can reduce net income tax.

Therefore,

You can apply for a maximum rebate of up to Rs.12, 500 under section 87A of the Income Tax Act for the fiscal year 2020-21.

Section 87A was first introduced by the government in the Treasury Act 2003.

The original maximum tax refund limit under section 87A of the Income Tax Act was Rs.2, 000. Increased to Rs.5,000 in the Union’s 2016 budget.

Download and prepare at a time 50 Employees Automatic Form 16 Part B for the F.Y.2021-22 as per new and old tax regime.

What is a section 87A tax rebate?

 In other words, The 2017 Union budget raised Rs.2,500 for people whose net taxable income was up to Rs.3,50,000. After the adoption of the Union budget for 2019, the government increased the net taxable income to 5 lakhs. The 87A rebate limit has also been raised to Rs.12,500.

What is an income tax refund?

However, An income tax refund can simply be understood as a form of a tax refund that you receive from the Income Tax Department under certain circumstances. An individual is required to receive a tax credit if they pay more taxes in a financial year than they owe to the government. In order to take advantage of the tax credit, you need to make sure that you accurately calculate your tax liability and file your tax returns within a certain period of time.

When was Section 87A introduced?

The Section 87A rebate was first offered in 2013 and has been in effect for several years, most recently updated in 2019. Under the latest provisions of Section 87A, any individual with an annual taxable income of up to 5 lakhs can benefit. from a discount on income tax in the amount of 12,500 rubles. Essentially, this results in persons with an annual income below 5 lakhs being completely exempt from income tax and can actually save on income tax in India.

Download and prepare at a time 100 Employees Automatic Form 16 Part B for the F.Y.2021-22 as per new and old tax regime.

Form 16

Section 87A – Then and Now

For instance

Interestingly, the income tax refund offered under section 87A has undergone a number of changes since its introduction in 2013. Recently, in the Fiscal Year, 2018-2019, income tax refund under section 87A 87A was limited to a much lower amount of Rs 2,500. Thus, if your total taxable income exceeds Rs 3.5 lakh and your tax liability exceeds Rs 2,500, Section 87A can no longer serve as a tax exemption for you.

Eligibility Criteria for Income Tax Refund Request u/s 87A for the Fiscal Year 2020-21 and Fiscal Year 2019-20

Here are the eligibility criteria for applying for the u/s 87A rebate of the Income Tax Act of 1961:

1. You can only claim the 87A rebate on the total gross tax before adding the 4% health and education tax.

2. Only resident individuals may benefit from the relief referred to in Article 87A.

3. Seniors (aged 60 to 80) may also apply for a discount under Section 87A.

4. Super seniors (over 80), on the other hand, cannot take advantage of the 87A discount.

5. The maximum amount you can claim as an 87A rebate must be the cap in section 87A (Rs.12,500) or the gross amount before tax, whichever is less.

6. The Section 87A reduction is available for both the old and the new income tax regime. Therefore, you may apply for a rebate under Section 87A for both F.Y2021-22 and F.Y2022-23

Download and prepare at a time 50 Employees Automatic Form 16 Part A&B for the F.Y.2021-22 as per new and old tax regime. 

What is a section 87A tax rebate?

How is income tax refund calculated?

To calculate the discount:

1) Calculate Gross Income – Sum income from all sources such as wages, capital gains, house rent, and income from other sources.

2) Find your net taxable income. Apply Section 80 deductions to your gross income, if applicable.

3) For net taxable income equal to or less than 5 lakhs, a rebate may be claimed under section 87A.

Three things to consider in section 87A

The tax credit offered under section 87A can be a big relief for various citizens across the country. However, here are some points that a taxpayer should keep in mind before thinking about income tax savings in India under section 87A:

1. This Section 87A tax refund cannot be used by non-resident Indians who are NRIs.

2. The benefits of this tax cut are not possible.

Download and prepare at a time 100 Employees Automatic Form 16 Part A&B for the F.Y.2021-22 as per new and old tax regime.

What is a section 87A tax rebate?
What is a section 87A tax rebate?

Enter your email address:

Delivered by FeedBurner

error: Content is protected !!