Hi Friends, I am Preetham. I am one of the CA student. May I know, Can a non-resident claim rebate under section 87A?
The rebate is available to a **resident individual** if his total income does not exceed Rs. 5,00,000. The amount of rebate shall be 100% of income-tax or Rs. 2,000, whichever is less. I.e is not available for Non-Resident.
An individual who is resident in India and whose total income does not exceed Rs. 5,00,000 is entitled to claim rebate under section 87A. Rebate under section 87A is available in the form of deduction from the tax liability. Rebate under section 87A will be lower of 100% of income-tax liability or Rs. 5,000. In other words, if the tax liability exceeds Rs. 5,000, rebate will be available to the extent of Rs. 5,000 only and no rebate will be available if the total income (i.e. taxable income) exceeds Rs. 5,00,000. Hence, Rebate can't be claimed for non-resident
The section 87A seeks to provide that an tax payer being an individual , whose total Taxable Income does not exceed 5,00,000/-( After deduction of U/s 10, 16, 80C and under chapter VI A). It is must be great opportunity to tax relief for below tax payers. b.This amendment will take effect from 1st April 2013 which effect for the Financial Year 2013-14 and Assessment Year 2014-15.
In Budget 2013 Finance Minister Mr. P. Chidambaram choose a middle way to give benefit to small tax payers and save a big amount of tax for tax revenue by neglected bigger slab tax payers. Sec 87A was introduced- A tax rebate which is not so high to affect a lot to revenue and it is only for middle class. The Finance Minister had said in the parliament: “Nevertheless, I am inclined to give some relief to the tax payers in the first bracket of Rs. 2 Lakh to Rs. 5 Lakh. Assuming an inflation rate of 10% and a notional rise in the threshold exemption from Rs. 2,00,000/- to Rs. 2,20,000/- I propose to provide a tax credit of Rs. 2,000/- to every person who has a total income upto Rs. 5 Lakh” It is assumed that about 1.8 crore taxpayers will get benefit of this rebate. So a little amount of Rs. 2,000/- per tax payer made a huge revenue loss of approx. 3,600 crore Indian rupees to income tax department. This section is applicable from 1-4-2014 i.e. it is applicable for A.Y. 2014-15. Sec 87A says: a.The section 87A seeks to provide that an tax payer being an individual , whose total Taxable Income does not exceed 5,00,000/-( After deduction of U/s 10, 16, 80C and under chapter VI A). It is must be great opportunity to tax relief for below tax payers. b.This amendment will take effect from 1st April 2013 which effect for the Financial Year 2013-14 and Assessment Year 2014-15. Section 87A provides a tax rebate upto Rs. 2,000/- to individuals who have total income upto 5,00,000/-. The tax slab remained same there is no change in it. This is only giving a rebate of tax amount which is equal to hundred percent of income tax or 2,000/- whichever is less i.e. minimum tax rebate is the tax amount in normal course and maximum is Rs. 2,000/-. Thus it will not be deducted from the income, it will be deducted from the tax amount. One point to be noted, education cess and secondary and Higher education cess will be charged after adjusting this rebate. Understanding of rebate u/s 87A •Only individuals can take benefit of this. Individual can be male, female or senior citizen. HUF, Companies, Partnership Firms, LLPs are not allowed to claim this rebate. •**Only Resident individuals are eligible**. •This rebate is not applicable to Super Senior Citizens i.e. individuals who has attained the age of 80 because their income upto 5,00,000/- is exempt from Income tax and this section doesn’t applicable on above 5,00,000/- total income. •This relief is for all individuals whose total income is not more than 5,00,000/-. This means total income can be 5,00,000/-. •This is applicable from 1-4-2014 it means it is for assessment year 2014-15 or financial year 2013-14. •87A is applicable on total Income not on Gross Income. Gross income means total of income under all five heads i.e. Salary, House Property, Business or Profession, Capital Gains and Income from other sources. When we deduct all losses of business or other under other heads and deductions u/s 10, 16 and chapter VI A then it becomes Total Income. It means this income must be reduced by all available deductions and rebate except sec 87A. So this makes possible that Gross income can be more than 5,00,000/-. It must be equal or below 5,00,000/- after deductions of sec 10, 16 and all deductions of chapter VI A for claiming rebate under this section. •Filing of income tax return is necessary in spite of fact that total income is below exempt limit after this rebate.
Section 87a rebate available only to Residents so non residents can’t claim this benefit
87A. An assessee, being an individual resident in India, whose total income does not exceed five hundred thousand rupees, shall be entitled to a deduction, from the amount of income-tax (as computed before allowing the deductions under this Chapter) on his total income with which he is chargeable for any assessment year, of an amount equal to hundred per cent of such income-tax or an amount of two thousand rupees, whichever is less.