Rebate U/S 87A For AY 2016-17

Income Tax Rebate Under Section 87A For A.Y. 2017-18 (F.Y.2016-17) Durgesh Vashisth durgeshvashisth@gmail.com 9899812287 Rebate of up to Rs. 5,000 for resident individuals having total income of up to Rs. 5,00,000 as per Sec-87A of Income Tax Act, 1961 for A.Y. 2017-18 i.e. F.Y. 2015-16. The rebate shall be equal to the amount of income tax payable on the total income for assessment year 2017-18 or an amount of Rs. 5,000, whichever is less. Key Point :-  Individual residential of India,  Whose Total Income is up to Rs. 5,00,000,  Shall be allowed a rebate,  From Income Tax,  100% of Income Tax or Rs.5,000, Whichever is Less. Relief of Rs. 5000 from Tax Payable (5000) Total Income should be UPTO Rs 5 Lakh Income Tax Rebate Under Section 87A For A.Y. 2017-18 (F.Y.2016-17) Durgesh Vashisth durgeshvashisth@gmail.com 9899812287 Example 1 Compute the tax liability of X Ltd., a domestic company, assuming that the total income of X Ltd. Is Rs. 2,80,000. Answer Rs. Tax on total income@30% of Rs.2,80,000 84,000 Less: Rebate under section 87A* ( - ) 84,000 Add: Education cess@2% 1,640 Secondary and higher education cess@1% 840 Total tax liability 86,480 *As per section 87A the rebate of Rs. 5,000 is allowed to residential individual. Example 2 Compute the tax liability of Mr. X, a salaried employee (age: 45 years), assuming that the total income of Rs. 4,80,000. During the previous year ending on March 31, 2017. Answer Rs. Tax on total income@10% of Rs.2,30,000 23,000 (Rs.4,80,000-2,50,000) Less: Rebate under section 87A (5,000) 18,000 Add: Education cess@2% 360 Secondary and higher education cess@1% 180 Total tax liability 18,540 *As per section 87A the rebate shall be equal to the amount of income tax payable or an amount of Rs. 5,000, whichever is less. Income Tax Rebate Under Section 87A For A.Y. 2017-18 (F.Y.2016-17) Durgesh Vashisth durgeshvashisth@gmail.com 9899812287 Example 3 Compute the tax liability of Mr. X, a salaried employee (age: 45 years), assuming that the total income of Rs. 2,60,000. During the previous year ending on March 31, 2017. Answer Rs. Tax on total income@10% of Rs.10,000 1,000 Less: Rebate under section 87A (1,000) - Add: Education cess@2% - Secondary and higher education cess@1% - Total tax liability - *As per section 87A the rebate shall be equal to the amount of income tax payable or an amount of Rs. 5,000, whichever is less. a) 10000*10% = 1000 b) 5000 Rebate allowed of Rs.1000. Income Tax Rebate Under Section 87A For A.Y. 2017-18 (F.Y.2016-17) Durgesh Vashisth durgeshvashisth@gmail.com 9899812287 Example 4 Compute the tax liability of Mr. X (age: 45 years), assuming that the total income of Rs. 5,40,000. During the previous year ending on March 31, 2017. Answer Rs. Tax on total income@10% of Rs.2,90,000 29,000 Less: Rebate under section 87A ( - ) 29,000 Add: Education cess@2% 580 Secondary and higher education cess@1% 290 Total tax liability 29,870 *As per section 87A the rebate shall be equal to the amount of income tax payable or an amount of Rs. 5,000, whichever is less. Income Tax Rebate Under Section 87A For A.Y. 2017-18 (F.Y.2016-17) Durgesh Vashisth durgeshvashisth@gmail.com 9899812287 Example 5 Compute the tax liability of Mr. X, a salaried employee (age: 45 years), assuming that his casual income of Rs. 4,80,000. During the previous year ending on March 31, 2017. Answer Rs. Tax on total income@30% of Rs.4,80,000 1,44,000 Less: Rebate under section 87A (5,000) 1,39,000 Add: Education cess@2% 2,780 Secondary and higher education cess@1% 1,390 Total tax liability 1,43,170 *As per section 87A the rebate shall be equal to the amount of income tax payable or an amount of Rs. 5,000, whichever is less.