Who is eligible for 87A rebate?

You can claim the benefit of rebate under section 87A for FY 2020-21, and FY 2019-20, subject to the following conditions are satisfied: You are a resident individual. Your total income after reducing the deductions under Chapter VI-A (Section 80C, 80D and so on) does not exceed Rs 5 lakh in an FY.

What is the limit for tax exemption?

Therefore, under the new tax regime, basic exemption limit will remain Rs 2.5 lakh for all taxpayers.” Do keep in mind that only individuals having no business income in a financial year are eligible to choose between both the tax regimes every year.

How is income tax rebate calculated?

To calculate rebate under section 87A, calculate your gross income and subtract the available deductions under Sections 80C to 80U. Now, if your net taxable income is less than Rs. 5 lakhs, you are eligible for the rebate upto Rs 12500 on the tax payable before health and education Cess.

Should I pay tax if my income is less than 5 lakhs?

No income tax needs to be paid if your taxable income is below Rs 5 lakh, and yet there is a tax of 5\% on income above Rs 2.5 lakh. The truth is, if your income exceeds Rs 2.5 lakh, you do need to pay income tax. However, if it doesn’t exceed Rs 5 lakh, this tax liability is cancelled out by a tax rebate.

Do I need to pay tax if my income is less than 5 lakh?

Presently an individual tax payer, who is resident of India for income tax purpose, is entitled to claim tax rebate up to Rs. 12,500 against his tax liability if your income does not exceed ₹5 lakh. However, your entitlement to claim the rebate under Section 87A gets lost altogether once the income exceeds this limit.

Is rebate taxable income?

Generally speaking, the IRS considers transaction-related points or rewards as rebates, and not as taxable income. Think of the rebate as a discount you’ll receive on your purchase later.

What is rebate in income tax?

In the most generic sense, a tax rebate is a refund that you are eligible for in case the taxes you pay exceed your liability. For instance, if your tax liability amounts to Rs. 30,000, but your FD issuer pays the Government a TDS amounting to Rs. 40,000 on your behalf, you qualify for a rebate or refund.

What is the meaning of rebate in income tax?

Income tax rebate is a refund on taxes if the tax paid by an individual is more than the tax liability. In other words, you will avail a refund on tax money at the end of every financial year if your tax liability is less than that of the amount paid by you.