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  • Category: Tax Planning

    Income Tax rebate of Rs.2000.00

    Wondering about the tax rebate if income is less than or equal to 5 lakh? Not sure about how the calculation would be done for the coming financial years? Ask our tax planning experts in ISC for correct details.

    Would the Income tax rebate of Rs.2000/- for those whose income is less than or equal to Rs.500000/- be applicable for financial year 2013-14? Also give me an example how this will be calculated. Say for example my total CTC is Rs.485000/-, then how will they give rebate?
  • Answers

    6 Answers found.
  • There is a relief for Tax Payers in the bracket of 2 lakhs to 5 lakhs. A tax credit of Rs. 2000 to every person with total taxable income up to Rs.5 lakhs. In simple sense, one can say that those with a tax liability of up to Rs 2,000 will not have to pay any tax. You will have to Pay less if you fall in the 10 % tax bracket. As per government data, 1.8 crores people fall under this tax bracket and all of them will have to pay a less amount tax of Rs. 2000/- from the total tax amount.

    With Best Regards,

  • Tax rebate of Rs.2000 u/s 87A, is applicable for F.Y. 2013-14 only, so in case your income as mentioned falls below Rs.5 lakh.

    Practical example applicable to you will be as follows:

    a) Salary Income: Rs. 485000
    b) Deduction u/s 80C: Rs.100000
    c) (a)-(b)Net Taxable income: Rs. 385000
    d) Tax on Rs.385000 will be Rs.19055*

    a) Taxable income = Rs. 385000
    b) Less: Basic exemption limit: 200000
    c) Net taxable salary = Rs. 185000

    Tax @ 10% = 10%(185000) = Rs.18500
    Education cess @ 3% on 18500 = Rs.555
    Total tax = 18500+555 = Rs.19055

    Now the rebate of Rs.2000 u/s 87A will be applied here and the balance tax will be deposited i.e.
    Rs.19055 - Rs.2000 = Rs. 17055

    Actual tax liability after providing for the rebate will be Rs.17055.

    Since you are a salaried employee hence the employer will deduct the actual applicable after providing for the benefit of above section. Although you can verify the same with accounts department of your company.

    For more examples you can visit the site and search for section 87A. Few more examples with detailed explanation of the section is provided on the site.

    Hope your doubts are clear.

    Live before you leave.

  • Hi Manoj,

    I have got 100% clarity on the rebate of Rs.2000/-. I have also calculated in excel sheet as per your workings got the answer. Thanks for your help.

  • Here tax explained clearly..So I understand clearly this Rs.2000/- tax rebate u/s 87A will be deducted as exemption.

  • You are most welcome Mr. Saravanan. In case of any doubt regarding Income Tax, you can always ask your questions, I will help you out.

    Live before you leave.

  • Rebate under section 87A is applicable in financial year 2013-14 and the question how can you get rebate under section 87A is given below:

    as you mentioned in your question your CTC is 4,85,000/- so you can get rebate of Rs. 2,000/- under section 87A is as follows:

    1. CTC Rs. 4,85,000/-
    this is gross total income
    now deduct some deduction under section 80C normally and suppose your income after deduction under section 80C Arrive less Rs. 5,00,000/- then you can claim rebate under section 87A.

    suppose after claiming of deduction under section 80C your income comes to Rs. 4,00,000/- then in this income tax would become Rs. 10,300/- for assessment year 2017-18, in this case you can claim Rs. 2,000/- as rebate under section 87A.

    i.e. you will have to pay only Rs. 8,300/- (net tax after taking rebate u/s 87A)

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