Income Tax Rebate Under Section 87A Of Income Tax Act FY 2019-20

Income Tax Rebate Under Section 87ARebate under section 87A: There is a change in income tax rebate under section 87A of income tax act for fy 2019-20.

If your total income (Gross income – saving) is 5 lakhs. You can get income tax rebate of rs. 12,500 under section 87A fy 2019-20.

Hence in union budget 2019,if your total income is 5 lakhs,then your income tax liability will be zero.

How to calculate income tax rebate (for govt. Employees)

Suppose, your gross income  is rs 6,00,000.

Also standard deduction of rs 50,000 applies.

Thus 600000 -50,000=550,000

Now suppose you avail 150,000 rs under section 80c.

So 5,50,000-150,000=4,00,000.

Now we know 0-250,000=nill tax.

Hence on remaining rs. 1,50,000,there will be tax @ 5%.

So 5% of 150,000 is rs. 7500.

Now according to new union budget 2019

There will be income tax rebate of rs 12,500 under section 87A, if your taxable income(your salary-standard deduction-deductions u/s 80c-80u) is rs. 5 lakhs or less.

Hence in this example our total or taxable income is rs 4,00,000.

And thus full amount of rs. 75,00 gets rebate under section 87A fy 2019-20.

So finally your tax liability is rs 0.

Income tax rebate for senior citizens

Either your are govt. Employees or senior citizen,income tax rebate is applicable to you.

The condition for availing income tax rebate under section 87A for senior citizen,is that:

Your total income must be less than or equal to 5 lakhs.

How to calculate income tax rebate for senior citizens (age >=60 & <80 yrs

Assume that your gross pension for fy 2019-20 is 7 lakhs.

So deduct rs 50,000 as standard deduction from 7 lakhs.

And 7,00,000-50,000=6,50,000

So again suppose your tax saving from 80C to 80U are 150,000

Hence 6,50,000-150,000= 5,00,000.

So your total taxable income becomes 5 lakhs.

Now for senior citizens having attained age  60 yrs. & above and less than 80 yrs.

0-3,00,000 = nil tax.

300,001-5,00,000 = @5%

5,00,001-10,00,000 [email protected]%

10,00,000 & above = @ 30%

Now in this example we have total taxable income is 5 lakhs.

So 0-3,00,000= rs. 0 tax

Remaining 300,001-5,00,000 = @5%= rs. 10,000.

Hence your tax liability becomes rs. 10,000.

Now under section 87A,income tax rebate of rs. 12,500 is  applicable to you.

As in Budget 2019,if your total income,after 80C-80U deductions is 5 lakhs,only then you can get rs. 12500 tax rebate.

So in this case you  get  rs. 10,000  full tax rebate.

How to calculate income tax rebate for Super senior citizens (age 80 yrs & above)

Let us that your gross pension for fy 2019-20 is 7 lakhs.

So deduct rs 50,000 as standard deduction from 7 lakhs.

And 7,00,000-50,000=6,50,000

So again suppose your tax saving from 80C to 80U are 150,000

Hence 6,50,000-150,000= 5,00,000.

So your total taxable income becomes 5 lakhs.

Now for senior citizens having attained age  60 yrs. & above and less than 80 yrs.

0-3,00,000 = nil tax.

300,001-5,00,000 = @5%

5,00,001-10,00,000 [email protected]%

10,00,000 & above = @ 30%

Now in this example we have total taxable income is 5 lakhs.

So 0-5,00,000= rs. 0 tax

Remaining 500,001-10,00,000 = @5%= rs. 10,000.

Hence your tax liability becomes rs. 10,000.

Now under section 87A,income tax rebate of rs. 12,500 is  applicable to you.

As in Budget 2019,if your total income,after 80C-80U deductions is 5 lakhs,only then you can get rs. 12500 tax rebate.

So in this case you  get  rs. 10,000  full tax rebate.

Conclusion

Finally,it is clear from the above discussion that you can get income tax rebate of rs. 12,5000 only if your total income is 5 lakhs or less.

Also read:

How to calculate Income tax for govt. Employees

Kuldeep Singh
 

is a professional blogger,teacher and income tax expert

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