Ambiguity in interpretation of rebate/relief rs. 2000 as per

TDS 2019 views 7 replies

Ravindra K. Banthia

Others

26 Points Joined March 2014

Sorry if this post is akin to one already answered. I need an answer fast, or the wrong amount might get deducted as TDS this month.

I am a salaried professional (in a college).

My gross income = 4,89,364

Total Deduction under 80c etc = 79,298

Net Income = 4,10,066

STD Deduction = 2,00,000

Taxable Income = 2,10,066

Final Tax @ 10 % with 3% cess = 21,637

My employer (the college) insists on collecting this whole amount from me.

I wish to know whether the rebate/relief Rs. 2000 as per Section 87A has to be given by me as TDS?

My employer insists that the above rebate of Rs. 2000 can only be obtained by me as a refund when I file my income Tax return.

Another quick one: Is the tax calculation of a salaried person based on Gross Income or Net Income as far as the slab is concerned?

So if my Gross Income is Rs 5,00,001 but my Net Income after allowing for deductions under 80c etc is Rs 4,00,001, which slab do I belong to?

ii. Where the total income exceeds Rs. 2,00,000/- but does not exceed Rs. 5,00,000/-.

iii. Where the total income exceeds Rs. 5,00,000/- but does not exceed Rs. 10,00,000/-.

Thank you.

Replies (7)

SURESHAN K

Auditor

189 Points Joined January 2014

Rebate of income-tax in case of certain individuals.

87A. An assessee, being an individual resident in India, whose total income does not exceed five hundred thousand rupees, shall be entitled to a deduction, from the amount of income-tax (as computed before allowing the deductions under this Chapter) on his total income with which he is chargeable for any assessment year, of an amount equal to hundred per cent of such income-tax or an amount of two thousand rupees, whichever is less.

It is a deduction from the amount of income tax on total income which should be considered while making TDS. There is no authority for employers argument.

Total income means income after chapter VIA deductions ie. net income

Mihir

Wealth Manager

5293 Points Joined December 2008

Lot of people are confused regarding this provision. Employers wants to deduct TDS thinking that they might receive a short TDS deduction notice, whereas employees do not want to pay more tax today only to receive a refund a few months after. But if we look at the technical definition of rebate, it is "pay back a sum of money". Here the wording says that the tax paid by the assessee, shall be eligible for a refund of Rs. 2000/- provided the conditions laid down u/s 87A are fulfilled. Therefore, the section is treating an assessee eligible to receive a refund. This is just my interpretation. I maybe wrong.

Ravi

Nothing Is Impossible To A Willing Heart

120 Points Joined October 2008

Hi All,

The following links/attachments may give you clear picture of Sec. 87A Deduction. Pls go through:

1. Attachment: Open the attachment & Type Password: aubsp

2. Go to this web address: https://www.charteredclub.com/section-87a-rebate/

Sources: AUBSP.com; Chartered Club.com

Thanks & Regards,

Ravi

Ravindra K. Banthia

Others

26 Points Joined March 2014

Thank you, so much every one.

I have understood the mechanics of the calculation.

My question is as follows:

Final Tax @ 10 % with 3% cess = 21,637 (more than Rs 2000, even without the cess)

My employer (the college) insists on collecting this whole amount from me.

I wish to know whether the deduction of Rs. 2000 as per Section 87A has to be given by me as TDS to my employer?

My employer insists that the above rebate of Rs. 2000 can only be obtained by me as a refund when I file my online income Tax return.

In other words, he says that he will cut the the Rs. 2000 from my salary as TDS.

Ravindra K. Banthia

Others

26 Points Joined March 2014

Originally posted by : e.filer B.Com/ Hyderabad
	RAVINDRA,YOU did not understand anything. Consult a CA OR the CA of your college personally. Otherwise yu are vasting (y)our? time.

Sorry that you feel offended. I am not a CA or a B. Com, but I happen to be an IITian.

Mr. SURESHAN K and Mihir have understood my dilemma.

Unfortunately their opions are different.

The former says that my employer does not have the right to cut Rs. 2000 from my salary, while the latter says that the Rs. 2000 will be given back to as a refund after filing my tax return.

Siddharth

Student

128 Points Joined October 2011

Hi,

TDS should be deducted net of rebate. No need of paying and claiming refund of the same. Instead ask ur employer to consider rebate of Rs.2,000 before deducting TDS.