The prime source of the Government to generate revenue from the public is the tax. The Government spends these generated revenues on public infrastructure, hospitals, education, and many programs. So, Government has made some changes in the tax structure to give relief to lower-income groups.
However, a person whose income is more than Rs 5 lakh, then such a person cannot avail of the benefit of a tax rebate. Concerning tax rebate, if your taxable income, i.e., income minus deductions is more than Rs 5 lakh, let us suppose, it is Rs 5,00,001 then you will have to pay the tax as per the tax chart. In short, you will not be entitled to the income tax rebate benefit.
Income Tax Section 87A
Section 87A comes under the Finance Act, 2003 that defines the citizens whose income is less than Rs 5 lakh can avail the tax rebate up to Rs 12,500. Once the income increased above Rs 5 lakh, then such a person won’t get the tax rebate.
However, the basic limit of Rs 2,50,000 is still existing and it is applicable for all individuals including HUF, residents, and non-residents. The reason behind the same is to keep the people in the tax net and given the exemption in ITR filing.
The tax norms fixed by the Government depend upon the tax liability. For instance, if your income lies below the range of Rs 2,50,000, then tax liability is zero, which means you don’t have to pay any taxes. However, if the income lies between Rs 2,50,000 to 5,00,000, then tax liability will be 5% of Rs 2.5 lakh results Rs 12,500.
Moreover, if the income is above Rs 5 lakh, then tax liability will be 20% of Rs 10,000 that comes to Rs 2000. So, net tax liability will be the sum of Rs, 12,500 and Rs 2000 which equals Rs 14,500. Well, if you think that this is the final tax liability, then wait because you need to add a cess of 4% and that results in Rs 15,080.
So, if your income is above Rs 5 lakh, then you need to pay Rs 15,080 as a tax. So, if your income lies above the marginal figure of Rs 5 lakh, then you can go with section 80C, 80D for the deduction.
Income Tax Returns 2021-22: Financial Transactions That Will Get Reported To The I-T Department
Moreover, If you want any other guidance concerning ITR Filing, please feel free to talk to our business advisors at 8881-069-069.
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