Tax filing is not just the time when we declare our tax status. It is also the time when we apply for refunds. One such automatic refund or tax rebate offered by the income tax department this time would be the newly introduced section 87a. Let us see what this section means for us.
What is Section 87A?
It is the tax rebate declared by the finance ministry in the previous year’s budget speech. It is a specific amount that will be discounted from the tax payable for the year for all individuals whose income is up to Rs. 5 lakh p.a.
(Also see: Have you disclosed these incomes in tax filing?)
How much is the rebate?
The tax rebate offered is Rs. 2,000 or the tax payable, whichever is the least. Hence, it means if your tax payable is less than Rs. 2,000 for the year, then the tax payable will become nil. It also means that there will not be any additional refund to the tax payer if original tax payable is less than Rs. 2,000.
To what period is it applicable?
It will be applicable for income generated between April 1st, 2013 and March 31st, 2014 i.e. AY 2014-15 or FY 2013-14. Whether it is continued for the next financial year as well is yet to be seen in the upcoming budget.
(Also see: Income tax penalty for late filing)
How to claim this rebate?
The tax rebate can be claimed while filing your taxes for the previous financial year. The amount will be deducted from the tax payable. After this, surcharge/cess would be applicable as usual.
How many will benefit from this rebate?
This section is set to benefit at least 1.8 crore tax payers in the country. Most of the tax payers fall in tax exempt and 10% slab categories.
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