Budget 2019 | Rebate u/s 87A for AY 2020-21 | No Tax upto Rs. 5 Lacs Explained | Taxpundit

Rebate under section 87A provides for a marginally lower payment of taxes to individuals earning an income below the specified limit. It is provided to reduce the tax burden of the lower income bracket. Condition to Claim Rebate u/s 87A - 1. You must be a RESIDENT 2. You must be an INDIVIDUAL assessee 3. Your Total Income after deductions of Chapter VIA is equal to or less than Rs 5 lakhs. 4. The rebate is limited to Rs 12,500 Tax Calculation as per New Scheme for different Income Groups is as under - Scenario - A Income after All Deductions of Chapter VI-A - Rs. 3,00,000 Tax on 2,50,000 - Nil Tax on Balance 50,000 (50,000 x 5%) - 2,500 Total - 2,500 Less :- Rebate u/s 87A - 2,500 Tax Liability - Nil Scenario - B Income after All Deductions of Chapter VI-A - Rs. 5,00,004 Income after rounding off u/s 288A - Rs. 5,00,000 Tax on 2,50,000 - Nil Tax on Balance 2,50,000 (2,50,000 x 5%) - 12,500 Total - 12,500 Less :- Rebate u/s 87A - 12,500 Tax Liability - Nil Scenario - C Income after All Deductions of Chapter VI-A - Rs. 5,00,005 Income after rounding off u/s 288A - Rs. 5,00,010 Tax on 2,50,000 - Nil Tax on Next 2,50,000 (2,50,000 x 5%) - 12,500 Tax on Balance 10 (10 x 20%) - 2 Total - 12,502 Less :- Rebate u/s 87A - Nil Add :- Health & Education Cess @ 4% - 500 Tax Liability - 13,002 Please like and share our video. Subscribe our channel for latest tax updates regularly. Visit our website for more details : www.taxpundit.org