Rebate u/s 87A for AY 2024-25

Rebate u/s 87A for AY 2024-25: Everything You Need to Know

Introduction

Rebate under Section 87A offers significant tax relief for eligible taxpayers. For Assessment Year (AY) 2024-25, understanding its nuances under the new tax regime is crucial for maximizing your savings.

What is Rebate u/s 87A?

Section 87A of the Income Tax Act allows individual taxpayers to claim a rebate, reducing their tax liability. This rebate is available for both old and new tax regimes, subject to eligibility.

Eligibility for Rebate u/s 87A:

• Applicable only to resident individuals.
• Total taxable income must not exceed ₹7,00,000 under the new tax regime for AY 2024-25.
• The maximum rebate amount allowed is ₹25,000.

How is Section 87A Rebate Calculated?

To calculate the rebate:

1. Compute total taxable income after all deductions (like Section 80C).
2. Check if the total income is within ₹7,00,000.
3. Calculate tax liability using the applicable slab rates.
4. Rebate u/s 87A is the lower of your tax liability or ₹25,000.

Rebate u/s 87A Under New Tax Regime:

Under the new tax regime introduced in AY 2024-25:

• The rebate is more beneficial due to the higher income limit of ₹7,00,000.
• Standard deductions like ₹50,000 for salaried individuals are also allowed.

Example: Rebate u/s 87A Calculation:

If your total taxable income is ₹6,80,000:

1. Tax liability as per slabs: ₹25,000.
2. Eligible rebate: ₹25,000.
3. Net tax payable: ₹0.

FAQs About Rebate u/s 87A:

Q1: How is Section 87A rebate calculated?
A: The rebate is calculated based on total taxable income and is limited to a maximum of ₹25,000 or the tax payable, whichever is lower.

Q2: Is rebate u/s 87A available under the new tax regime?
A: Yes, the rebate is available under the new tax regime if your taxable income does not exceed ₹7,00,000.

Q3: Who is eligible for the rebate u/s 87A?
A: Resident individuals with a taxable income of up to ₹7,00,000 for AY 2024-25 are eligible.

Q4: Can I claim a rebate u/s 87A on short-term capital gains?
A: Yes, if your total income, including short-term capital gains, is within ₹7,00,000, you can claim the rebate.

Q5: What is the rebate u/s 87A formula in Excel?
A: Use this formula:
=MIN(25000, MAX(0, (Taxable Income – 700000)*Applicable Tax Rate))

Conclusion:

Rebate u/s 87A is a powerful tool to reduce your tax liability, especially under the new tax regime. By staying informed about eligibility and calculation, you can optimize your tax savings.

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