All You Need To Know About Income Tax And Rebate

As an earning citizen of the country, you are expected off certain duties towards the government. Paying the liable income tax is one of them. India has a progressive income tax reform where the liable income tax will increase along with an increase in your annual income. Growth in career will invariably lead to paying more income tax. The government has tax rebates for people whose net taxable income is below a certain threshold level. A rebate calculator will help you understand your status as an income taxpayer and the full list here will help you to find if you need to pay taxes for different sources of income.

The Income Tax Act of 1961 ensures that the rules and regulations are the same for all. The act has seen several amendments to keep up with the changing times. This act governs the income tax of the country and ensures that all liable taxpayers adhere to it. In 2013, Section 87A was introduced to benefit taxpayers. The section 87A has provisions that allowed taxpayers to avail tax rebates if their net income was below a certain amount called a threshold limit. In February 2019, the interim budget announced a tax rebate under section 87A. The government proposed that people who had income up to INR 500,000 need not pay income taxes with the help of tax rebates. To allow this provision section 87A was added to the Income Tax Act.

The current laws ensure that you get a tax rebate of 2,500 if your annual taxable income is lower than INR 500,000. The amendment has ensured that the income tax rebate is increased to 12,500. You cannot avail rebates if your taxable income is above the threshold limit. The rebate is allowed only for individual taxpayers. Rebates cannot be availed by a company, firm or HUF. Tax rebates can be availed by both men and women. If your liable tax is INR 12,500 you can avail the rebate. Section 87A for the income tax rebate has evolved over the years since its inception. Even if you are not liable to pay taxes, you are not exempted from filing tax returns. To avail tax rebates, you need to file your income tax so you can get a refund of the taxes already paid.

If you are a salaried employee with an annual income more than 500,000 INR. Your employer will deduct taxes on a monthly basis before crediting the salary. When you file your income tax with all the deductions, your net taxable income will be less than INR 500,000 and you do not have to pay taxes. Under the revision of Section 87A, the government will have to refund all the taxes collected from you. The revision is a welcome addition for all taxpayers. People whose income is less than 500,000 INR will benefit the most. It helps them with more cash flow and empowers them to avail better loans and credit scores.

Leave a Reply