I have observed that the TDSCPC is issuing default notices by taking 87A rebate after calculating thee Education Cess on Tax liability which appears to be an error.
Could anyone please confirm if this is the case with you also and is there any remedy for this
The meaning of 'Rebate' is pay back a sum of money. If we look at the literal meaning of rebate, then this rebate u/s 87A is paying back the sum (tax) which the assessee has paid. So I think the employer is required to deduct full TDS without considering rebate u/s 87A, and therafter the assessee may claim the rebate u/s 87A for Rs. 2,000/- in his ITR.
Cess has to be deducted after rebate u/s 87A. Cess is an amount which is payable on tax payable. Since, rebate is not tax payable, cess should not be payable on it.
I haven't seen any such case, where 87a deduction is after cess.
Yes i agree with Abhishek Pandey
Education Cess & Secondary & Higher education cess is to be calculated after allowing the rebate under section 87A on balance tax due. - See more at: https://www.simpletaxindia.net/2014/02/Calculation-of-Rebate-under-Section-87A-rs-2000-and-FAQ-on-87A-with-examples.html#sthash.8XFK2qaV.dpuf
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