Section 87A after Budget 2014
I am getting too many mails regarding the existence of section 87A after budget 2014. Since there were no words on the section 87A in the budget, many of our readers are eager to know whether the section 87A still exists or faded away like section 80EE.
There is good news for all assessees who are getting benefited by section 87A because it will continue to give benefit this year also. Since section 87A is neither withdrawn nor was it for a particular year like section 80EE, so it still holds the ground. Even the Online Tax Calculator present on the Income Tax Site also calculates tax after taking tax rebate u/ 87A into account.
Thus assessee having gross total income between Rs.2.5 lakh to Rs.5 lakh are still able to reduce their tax liability by Rs 2,000. Essentially, there is NIL tax liability for annual incomes up to Rs.2.70 lakh.
Here is how tax will be calculated for the current year after giving effect to section 87A:
|Age Groups||Assesse<60 years||60 years<Assesse<80 years||Assesse>80 years|
|Gross Total Income||Rs 4,20,000||Rs 4,70,000||Rs 6,10,000|
|Less: Deduction u/s 80C||Rs 1,50,000||Rs 1,50,000||Rs 1,00,000|
|Taxable Income||Rs 2,70,000||Rs 3,20,000||Rs 5,10,000|
|Tax||Rs 2,000||Rs 2,000||Rs 2,000|
|Tax Rebate u/s 87A||Rs 2,000||Rs 2,000||Not Applicable|
|Tax Payable after rebate||NIL||NIL||Rs 2,000|
|Cess @ 3%||NIL||NIL||Rs 60|
|Total Tax Payable||NIL||NIL||Rs 2,060|