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Income Tax Rebate hike Rs. 5000/- under Section 87A, With Automated Master of Form 16 Part B with 24Q & 26 Q for F.Y.2016-17 and A.Y.2017-18

Download Automated Income Tax Form 16 Part B with Synopsis of 24Q & 26Q for the Financial Year 2015-16 & Assessment Year 2017-18 [This Excel utility can prepare at a time 50 employees Form 16 Part B with Synopsis of 24Q & 26Q which is required submit to the NSDL]



Feature of this Excel Utility :-


1) Automatic Calculate your Income Tax as per the Budget 2016
2) All modification have in this Excel Utility as per the Budget 2016
3) Automatic Prepare Form 16 Part B after filling the employee’s Data
4) Automatic prepare the Quarter ended statement of each employee in separate sheet
5) Automatic prepare the Tax Deduction of each employees Quarterly/Monthly in Separate Sheet
6) Automatic Convert the Amount in to the In-Word ( Without any Excel Formula)
7) Prepare at a time 50 employees Form 16 Part B with 24Q & 26Q

Snapshot of Form 16 Part B :-

  

An individual resident of India, whose total income does not exceed 5 lakh Rupees is entitled to a deduction of Rs 2000, from the amount of income-tax as computed after allowing the deductions. This articles explains Income Tax rebate under section 87A in detail, What is Section 87A,How much income tax rebate can one claim under section 87A ,How is Income Tax Rebate under section 87A calculated with examples, When to Claim Income Tax rebate under Section 87A?What is difference between Exemption, Rebate and Deduction?

What is Section 87A?
To help individual taxpayers in lowering the tax outflow from their pocket a new section 87A was introduced. Section 87A provides for income tax rebate of Rs 2,000 for individual resident tax payers not having income more than 5 lakh. .  The salient features of Income Tax Rebate under Section 87A:

 

1.  The amount of tax rebate under section 87A is restricted to maximum of Rs 2,000. If  the computed tax payable is less than Rs.2,000, say Rs.1,500 the tax rebate shall be limited to that lower amount ie Rs 1,500. The Income Tax Rebate has been increased from Rs. 2000 to Rs. 5000 in Budget 2016 and would be applicable from Financial Year 2016-17 onwards

2.   Rebate under Section 87A is only available to Individuals. All categories of Individuals whether Male or Female or Senior Citizens are eligible to claim Income Tax Rebate under Section 87A. Other types of assesses like HUF, Companies, Partnership Firms, LLP etc are not eligible to claim Income Tax Rebate under Section 87A.

3.   Income Tax Rebate under Section 87A is only available to Resident Individuals and not to Non-Resident Individuals.
4.                               Total taxable income should not be more than 5 lakhs.
5.    Income Tax Rebate of Rs. 2000 is allowed before the levy of Education Cess and Secondary and Higher Education Cess(SHEC). In other words, Education Cess and SHEC would be levied on the tax payable after allowing for Income Tax Rebate of Rs. 2000

6.   There is no benefit of this Rebate to Super-Senior Citizens i.e. Individuals above 80 years of age as their Income up to Rs 5 Lakh is already exempted from the levy of Income Tax

Who gets the tax rebate under section 87A?

Benefit under section 87A is available only to the individual Resident, aged less than 80 years, earning net income up to Rs 5 lakhs.  All the other assesses like HUF, AOP, BOI, Company, Trust, LLP, Partnership Firms etc. including individual NRIs are not eligible to claim tax rebate under section 87A.

Since when is the rebate provided under section 87A?
·                                 Rs 2000 under Section 87A was introduced from Financial Year 2013-14 (AY 2014-15) onwards. 
·                                 The Income Tax Rebate has been increased from Rs. 2000 to Rs. 5000 in Budget 2016 and would be applicable from Financial Year 2016-17 onwards.
Following table shows the rebate in various years. For filing the ITR before 31 Jul 2016 for FY 2015-16 or AY 2016-17 the rebate is Rs 2000 as shown highlighted in yellow.
Financial Year
Assessment Year
Rebate under section 87A
FY 2013-14
AY 2014-15
2000
FY 2014-15
AY 2015-16
2000
FY 2015-16
AY 2016-17
2000
FY 2016-17
AY 2017-18
5000

What does total net income means?

Total Net Income means the taxable Income less any tax deductions under 80C to 80U. Suppose your  income comes to Rs. 5,70,000 and you do tax saving of Rs 1,00,000 under section 80C. The total net income in your case comes to Rs. 4,70,000 which makes you eligible to claim tax rebate under section 87A.
How much Income Tax Rebate can one claim under section 87A?
The tax rebate is only limited to the total tax payable subject to maximum of Rs 2,000. So if the total tax payable comes to Rs 1,600 than the tax rebate would be  restricted Rs 1,600 with no tax refund of unused amount.
If I claim less than maximum limit under section 87A will I get refund?
No, there will be no such tax-refunds.
How is Income Tax Rebate under section 87A calculated?
The tax rebate under section 87A is to be deducted from the total tax payable. You are first required to
·                                 Sum  all incomes i.e. salary, house income, capital gains, business or profession income and income from other sources and
·                                 then deduct the eligible amount under 80C to 80U and under section 24(b) (Home Loan Interest) to come up with the net taxable income.
Examples of calculation of rebate under section 87A
Rameswar has Salary  of Rs. 3,50,000 p.a. He has put Rs 50,000 in EPF and life insurance policy paying premium. He is paying home loan of Rs 50,000 in a year. His income from other sources is Rs 15,000.  So lets Compute his tax liability . As after the deductions, taxable income comes to 2,65,000 and tax comes to 1500. So Rameswar can gets tax rebate of Rs 1500, not Rs 2000.
Description
 Amount
Salary Income
3,50,000
Income from House Property
-50,000
Income from Other Sources
15,000
Total Income
3,15,000
Deductions under 80C
50,000
Total Taxable Income
2,65,000
Tax on Income(@10%)
1500(10% of 2,65,000-2,500,000)
Less Rebate
1500
Total Tax Payable
0
But if compute tax liability of Madhumita who has income of Rs 4,00,000 and similar investments ie 50,000 in EPF and life insurance policy paying premium. She is paying home loan of Rs 50,000 in a year. Her income from other sources is Rs 15,000. As her taxable income comes less than 5 lakh she can claim rebate of Rs 2000. So her tax reduces by 2000 Rs. But she has to pay balance tax of Rs 4500.
Description
 Amount
Salary Income
4,00,000
Income from House Property
-50,000
Income from Other Sources
15,000
Total Income
3,65,000
Deductions under 80C
50,000
Total Taxable Income
3,15,000
Tax on Income(@10%)
6500(10% of 3,15,000-2,500,000)
Less Rebate
2000
Total Tax Payable
4500
Education Cess
135
Total Tax
4635
Lets compute tax liability of Rameswar who has income of Rs 8,00,000 and has  investments i.e 1,50,000 in EPF and life insurance policy paying premium and 15,000 in Medical Insurance. He is paying home loan of Rs 1,50,000 in a year. His income from other sources is Rs 15,000. After deductions his Income comes to 5,00,000 hence he can also claim rebate of Rs 2,00,000
Description
 Amount
Salary Income
8,00,000
Income from House Property
-1,50,000
Income from Other Sources
15,000
Total Income
6,65,000
Deductions under 80C
1,50,000
Deductions under 80D
15,000
Total Taxable Income
5,00,000
Tax on Income(@10%)
25000(10% of 5,00,000-2,500,000)
Less Rebate
2000
Total Tax Payable
23000
Education Cess
690
Total Tax
23,690
When to Claim rebate under Section 87A?
One can claim the rebate under section 87A while filling the ITR. The rebate under section 87A, i.e., deduction from the tax payable would be the amount of tax payable itself or Rs, 2000, whichever is less and such rebate shall be claimed while filing the return just before adding the Education Cess, Secondary & Higher Education Cess. If you use the E-filing Excel Utility or Java Utility is it calculated automatically. A sample of ITR with 87A deductions for example of Mr.Rameswar is shown below

Is the rebate under section 87A also available in case of belated return i.e after the due date has gone?
Yes you can claim Rebate under section 87A while filing ITR also. Rebate has nothing to do with time limit.
Can I claim Rebate if my Total income is more than 5 lakh?
As shown in example of Srinivas above even if your total income is more than 5,00,00 and by claiming deductions under various sections you can bring down the taxable income to 5,00,000 you can claim Rebate of Rs 2,000. The section  use word Total income not the word  Gross total income.
Can a senior citizen also claim rebate under section 87A?
Yes Tax Rebate under section 87A  is also available to a senior citizen, if the total income is Rs. 5 Lakh or less. Effectively, it means, a senior citizen, both male and female, need not pay any tax on total income of up to Rs. 2,70,000. However, this benefit is not available to a super senior citizen (age 80 or above) as his total income up to Rs. 5 Lakh is already fully exempted.
What is difference between Exemption, Rebate and Deduction?
Income Tax Rebate, Income Tax Deduction and Income Tax Exemption all reduce taxable income, they are similar terms but yet different.
Exemption means, your income is actually taxable but under some Income Tax section you can claim portion of it as exemption ie not subject to tax. For example, an individual getting his salary from employer is eligible for house rent allowance(HRA) exemption. This means, the HRA that he is getting is taxable but a portion of it will be deducted because of the exemption available. Similarly an individual can also claim other exemptions like, LTA (Leave Travel Allowance) exemption. Similarly, Income Tax Exemptions allowed to be claimed under head Capital Gains under Section 54, 54EC, 54F etc. So Income Tax Exemptions are those which are allowed to be claimed only from a specific source of Income and not from the Total Income. If you don’t claim it you won’t get it and whole amount would be taxable.

Deductions are allowed to be claimed in case the taxpayer has incurred some specified expenditure or made specified investments. The best example of Income Tax deduction is section 80C where you claim deduction for your investment in LIC, PPF, ELSS etc. To get this deduction you have to specifically make investments that are in section 80C irrespective of your type of income, salary income or income from business and profession. Difference between exemption and deduction is, while exemptions are deducted from their respective source as mentioned in Income Tax Act 1961, deductions are deducted from Gross Taxable Income i.e. after taking all taxable incomes together. Examples of Income tax deductions allowed are as follows:
·                                 Deduction under Section 80C
·                                 Deduction under Section 80TTA for Interest on Savings Account
·                                 Deduction under Section 80D for Payment of Medical Insurance Premium
·                                 Deduction under Section 80E for repayment of Interest on Education Loan
·                                 Deduction under Section 80G for Donations
·                                 Deduction under section 24 section for house property
Rebate is claimed from the total tax payable. While Income Tax Exemptions and Income Tax Deductions are claimed from the Income, Rebate is claimed from the Tax payable.

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