All set for ITR Filing

ITR Filing season is here. Are you all ready for your tax filing?

If you are a resident Indian and your net taxable income in FY 18-19 was up to 3.5 lakh, then this piece of information is for you. Go ahead, wish you a happy reading.

With less than two months left for 2019 tax filings, several people have started chalking out plans for ITR Filings. Like every year, people will encounter a number of questions relating to tax savings and related filing compliances. Here is a discussion on rebate under section 87A of the Income Tax Act, 1961 that will help you to save tax and improve your finances.

Under section 87A, individuals who earned a net taxable income up to Rs. 3.5 lakh are eligible for the rebate of Rs 2,500 for Financial Year 2018-19. It is to be noted that the Government in the interim budget for Financial Year 2019-20 has increased the amount of rebate from Rs. 2,500 to 12,500 with the condition that the net taxable income of resident Indian should not exceed Rs. 5 lakh.

Eligibility criteria

For availing the benefit of rebate u/s 87A, one needs to fulfill the following conditions: 

• He/she must be a resident individual. This rebate is not allowed to HUF, company, and firms.
• Net taxable income should not exceed Rs. 3, 50,000.

How it will work?

Say, Mr. Ram (28 years) had a gross salary of Rs 2.8 lakh last year. He didn’t make any investments, his net taxable income remains same i.e. Rs 2.8 lakh and the tax thereupon will be Rs 1,500. Then, Mr. Ram can claim a rebate of full Rs. 1,500 under section 87A and not liable to pay any tax.

In another instance, say Mrs. Varsha (35 years old) earned a gross salary of Rs 5 lakh in FY 18- 19. She invested Rs. 1, 50,000 in PPF which is eligible for deduction claim under section 80C. Her net taxable income becomes Rs. 3.5 lakh and the tax amount will be Rs 5,000. However, she can claim Rs 2,500 as rebate under section 87A and pay remaining Rs. 2500+ 100 as health & education cess (2500*4%).

Therefore, taxpayers can reduce their tax burden with the help of rebate under section 87A as tax payable amount either becomes NIL or a low figure.

Rebate considered in salary slip and TDS deducted

In case, your company has considered rebate under section 87A while making your salary payment and deducted lower tax, it is necessary to show in your ITR. In case your company did not consider the same and deducted TDS, you can claim it as a refund in your ITR.

How to claim a rebate?

One can claim rebate under section 87A at the time of filing an income tax return. The last date to file income tax returns for individuals in respect of Financial Year 2018-19 is 31ST July 2019 unless the Government plans to extend it. On missing the deadline, one has to pay a late fee under section 234F of the Income Tax Act.

Therefore, do mind the date 31st July 2019 to avail the rebate under section 87A.