Calculation of Income Tax Rebate of Rs. 2,000 – Sec 87A

Rebate Calculator for Asst. Year 2015-2016

REBATE CALCULATOR

Total Income

(After Deductions)

AGE

REBATE

There is a  lot of confusion in the manner in which the rebate u/s 87A of Income Tax Act is calculated. So we would like to explain the manner in which it should be calculated in this article.

rebate 2000 us 87A

Applicability:

    • Applicable From

Rebate u/s is inserted w.e.f. 01-04-2013 i.e., the rebate provision is applicable from Financial Year 2013-14 onwards (Asst. Year 2014-15) i.e., it is applicable for current FY 2014-15 (AY 2015-16).

    • Applicable To (Type of Assessee) 

1. Rebate is applicable for Resident Individuals i.e., Male and Female including Senior Citizens (less than 80 years).

2. Which means the rebate is not applicable for Non-Resident Individuals

    • Net Income Limit Less Than 5,00,000

1. The Rebate is applicable for above mentioned individuals whose Net Income i.e., Taxable Income does not exceed 5,00,000/-.

2. Which means only if your net taxable income is less than or equal to 5,00,000, you are eligible for rebate.

3. Even if your Gross Total Income is more than 5,00,000 but after considering deduction, the Net Income falls below 5,00,000 you are still eligible for rebate.

e.g. Your Gross Total Income = 6,20,000

       Deductions U/s 80C – 80U (LIC, PF, etc., ) = 150,000

       Net Taxable Income = 4,70,000

Since your Net Taxable Income doesn’t exceed Rs. 5,00,000 you will be eligible for rebate

Note: Although Resident – Very Senior Citizens (more than 80 Yrs) are also eligible for Rebate, but since their basic exemption is already 5,00,000 and Rebate is applicable only if the taxable income is less than 5,00,000, question of Rebate does not arise.

 

Rebate Calculation:

    • The amount of rebate is 100% of income tax or Rs. 2,000 whichever is less.
    • Rebate should be deducted before calculating education cess.
    • Illustrations on how to calculate the rebate:

Illustration 1

Calculation of Rebate u/s 87A

  Particulars Calculation Amt.
A Gross Total Income Rs. 3,50,000
B Deductions Rs. 40,000
C Net Taxable Income 3,50,000-40,000 Rs. 3,10,000
D Tax on Net Taxable Income 10% * (3,10,000-2,00,000) 11,000
E Rebate Allowed:
  • 100% of Tax (D)
11,000
  • Maximum Allowed
2,000
Least of (a) and (b) (2,000)
F Tax After Rebate 9,000
Add: Education Cess & S.H. Edu. Cess 9,000*3% 270
Net Tax Liability 9,000+270 9,270

 

Illustration 2

Calculation of Rebate u/s 87A

  Particulars Calculation Amt.
A Gross Total Income Rs. 2,50,000
B Deductions Rs. 35,000
C Net Taxable Income 2,50,000-35,000 Rs. 2,15,000
D Tax on Net Taxable Income 10% * (2,15,000-2,00,000) 1,500
E Rebate Allowed:
  • 100% of Tax (D)
1,500
  • Maximum Allowed
2,000
Least of (a) and (b) (1,500)
F Tax After Rebate Nil
Add: Education Cess & S.H. Edu. Cess Nil
Net Tax Liability Nil

Last Updated: 11th January 2015

Dilip Kumar

+Dilip Kumar (Author and Editor of The Tax Info) is a CA Student from Hyderabad, Loves Blogging on Tax related matter.

You can Subscribe for his updates on Facebook & Google+

 

3 thoughts on “Calculation of Income Tax Rebate of Rs. 2,000 – Sec 87A

  • August 19, 2015 at 9:43 pm
    Permalink

    Actually I was confused between gross total income & total income. Whether to calculate net tax payabe after deduction u/s VI-A after or what. Now it is clear. Very good guidance. Thanks to thetaxinfo.com. from Vinayak Wadelkar. Nasik.

    Reply
  • July 14, 2015 at 1:43 pm
    Permalink

    wether rebate allowed u/s44AD OR NOT

    Reply
  • September 25, 2014 at 6:20 pm
    Permalink

    I am also a ca final student, keep on enjoing taxation

    Reply

Leave a Reply

Your email address will not be published. Required fields are marked *

Connect with Facebook

More in Financial Year 2013-14, Income Tax, Tax Rates
tds on rent
How to Calculate TDS on Rent for the F.Y. 2014-15

Close
+Dilip Kumar