Section 87 A, federal tax act 1961, provides an ease to citizens under the tariff slab of 10%. A person whose yearly net salary is up to Rs. 5 Lakhs can get relief under certain circumstances. Under section 87 A, the person can claim a tax refund if the net annual income is below or equal to Rs. 5 Lakhs. According to this, the citizen can get a refund of up to Rs. 2K on tax.
The withdrawal under section 87 A firstly came into force in 2013. After that, it has been implemented for many more years than it was updated in 2019.
The interim spreadsheet for FY 2019 – 20 has given complete tariff withdrawal as per section 87 A to citizens whose net yearly salary is not extra than Rs. 5 Lakhs. Due to this update, the maximum tax withdrawal limit has been increased by 12,500 for qualified citizens from Rs. 2000 as per section 87A, federal tax act. However, if a citizen’s annual salary crosses Rs.5 Lakhs for AY 2020 to 2021, the withdrawal as per this act would be zero.
A federal tax refund is only given to a single person, not given to a company, BOI / AOP, or inflexible.
Suppose the total withdrawal amount is higher than the amount of federal tax computed before the withdrawal on that individual’s net salary. In that case, the one will be prosecuted for the estimated year.
Way Of Calculation Of Tax And Income
| INCOME DETAILS | INCOME |
| Gross income | 3,40,000 |
| Deduction 6A | 90,000 |
| Net total income | 2,50,000 |
| Tax payable | 5,000 |
| Rebate: Relaxation under 87A | 2,000 |
| Extra: Education tax | 60 |
| Extra: SHEC 30 | 30 |
| Total text payable | 3090 |
The Critical Point About Section 87 A:-
- Section 87 A, federal tax act is put into tariff AY and its consequent tariff AY.
- A person of the same country is only fit to avail of this tariff refund profit.
- Male and female, both can get the gain of the federal tax act refund.
- Aged senior citizens would not get any profit as per section 87 A.
Some Examples Of The Refund Allowed As Per Section A For An Individual And Senior Taxpayers:
| Total annual salary (Rs) | Refund as per Section 8A | Tax payable Before Chess | Tax payable +4% Chess |
| 270K | 1K | 1K | 0 |
| 360K | 3K | 3K | 0 |
| 540K | 0 | 20K | 20,400 |
| 12lakh | 0 | 2lakh | 2,08,000 |
Eligible criteria to avail federal tax refund profit as per section 87 A:-
Following terms are mandatory to withdrawal a federal tariff refund:- An individual taxpayer of India.
- A person should be an Indian.
- The whole salary minus the withdrawal should be less than or equal to Rs. 5 Lakhs.
- If the taxpayer is paying less than 12,500, the whole amount gets the refund as per section 87 A.
Refund Limit U/S 87A For All Years
| Year | Limit Of Taxable Income | Allowed Refund Amount Under Section 87A |
| 2013-2014 | 5,00,000 | 2,000 |
| 2014-2015 | 5,00,000 | 2,000 |
| 2015-2016 | 5,00,000 | 2,000 |
| 2016-2017 | 5,00,000 | 5,000 |
| 2017-2018 | 3,50,000 | 2,500 |
| 2018-2019 | 3,50,000 | 2,500 |
| 2019-2020 | 5,00,000 | 12,500 |
| 2020-2021 | 5,00,000 | 12,500 |
| 2021-2022 | 5,00,000 | 12,500 |
Conclusion
According to Section 87A, if the individual taxpayers have their income below five lakhs after claiming deduction, the tax will be rebated to the individual taxpayers. Firstly tax will be deducted from the payment, and after that, they will check eligibility for the rebate income. Senior taxpayers have different eligibility criteria for the tax rebate.
M/s Dinesh J. Shah & Associates is a CA firm in the field of Taxation, GST, Audit, Project Finance and Government Subsidy for more than 20 years. If you need further clarification/query, you can contact us on 9825373707 or mail at info@djshahca.com or officeidk@gmail.com.
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