Income tax rebate under section 87a? Working and Eligibility

Income tax rebate under section 87a?

Working and Eligibility

About Income

tax

rebate under section 87a

Rebate under Section 87A helps taxpayers reduce their income tax liability. You can claim the said rebate if your total income, i.e. after Chapter VIA deductions, does not exceed Rs 5 lakh in a financial year. Your income tax liability becomes nil after claiming the rebate under Section 87A.

An income tax rebate is a solution that helps us save money. But how? Each of us, in one way or another, is entitled to pay taxes directly or indirectly. However, tax rebates are not available on indirect taxes. It is because indirect taxes are based on the money spent. For direct taxes, we can apply for an income tax rebate u/s 87A by filing a tax return.

How to Claim Income Tax Rebate u/s 87A?

There are some simple steps involved that will help us claim a tax rebate under section 87A. Let us look at these steps:

Step 1 - The process begins by calculating our previous financial year's gross total income.

Step 2 - We subtract all the tax deductions we have claimed for our tax-saving investments.

Step 3 - After subtraction, we will get the Gross Total Income. This term indicates the taxable income of the previous financial year.

Step 4 - Now, let us estimate the gross tax liability. However, one crucial thing to consider is that we don't have to add cess to the amount.

Step 5 - Before cess, we can claim the gross tax liability and then arrive at the net tax liability.

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