04/02/2017
Rebate of up to Rs. 5,000 for resident individuals having total income of up to Rs. 5,00,000 as per Sec-87A of Income Tax Act, 1961 for A.Y. 2017-18 i.e. F.Y. 2016-17.
The rebate shall be equal to the amount of income tax payable on the total income for assessment year 2017-18 or an amount of Rs. 5,000, whichever is less.
Key Point :-
- Individual resident of India,
- Whose Total Income is up to Rs. 5,00,000,
- Shall be allowed a rebate, From Income Tax,
- 100% of Income Tax or Rs.5,000, Whichever is Less.
The above points have been represented below showing the manner of Computation:-
Example 1
Compute the tax liability of X Ltd., a domestic company, assuming that the total income of X Ltd. Is Rs. 2,80,000.
Answer
| Particulars | Rs. |
| Tax on total income@30% of Rs.2,80,000 | 84,000 |
| Less: Rebate under section 87A* | ( – ) |
| 84,000 |
| Add: Education cess@2% | 1,640 |
| Secondary and higher education cess@1% | 840 |
| Total tax liability | 86,480 |
*As per section 87A the rebate of Rs. 5,000 is allowed to residential individual.
Example 2
Compute the tax liability of Mr. X, a salaried employee (age: 45 years), assuming that the total income of Rs. 4,80,000. During the previous year ending on March 31, 2017.
Answer
| Particulars | Rs. |
| Tax on total income@10% of Rs.2,30,000
(Rs.4,80,000-2,50,000) | 23,000 |
| Less: Rebate under section 87A | (5,000) |
| 18,000 |
| Add: Education cess@2% | 360 |
| Secondary and higher education cess@1% | 180 |
| Total tax liability | 18,540 |
*As per section 87A the rebate shall be equal to the amount of income tax payable or an amount of Rs. 5,000, whichever is less.
Example 3
Compute the tax liability of Mr. X, a salaried employee (age: 45 years), assuming that the total income of Rs. 2,60,000. During the previous year ending on March 31, 2017.
Answer
| Particulars | Rs. |
| Tax on total income@10% of Rs.10,000 | 1,000 |
| Less: Rebate under section 87A | (1,000) |
| Add: Education cess@2% | Nil |
| Secondary and higher education cess@1% | Nil |
| Total tax liability | Nil |
*As per section 87A the rebate shall be equal to the amount of income tax payable or an amount of Rs. 5,000, whichever is less.
- 10000*10% = 1000
- 5000
Rebate allowed of Rs.1000.
Example 4
Compute the tax liability of Mr. X (age: 45 years), assuming that the total income of Rs. 5,40,000. During the previous year ending on March 31, 2017.
Answer
| Particulars | Rs. |
| Tax on total income@10% of Rs.2,90,000 | 29,000 |
| Less: Rebate under section 87A | (- ) |
| 29,000 |
| Add: Education cess@2% | 580 |
| Secondary and higher education cess@1% | 290 |
| Total tax liability | 29,870 |
No Rebate U/s. 87A is allowed as Total Income Exceeds Rs. 5,00,000/-
*As per section 87A the rebate shall be equal to the amount of income tax payable or an amount of Rs. 5,000, whichever is less.
Example 5
Compute the tax liability of Mr. X, a salaried employee (age: 45 years), assuming that his casual income of Rs. 4,80,000. During the previous year ending on March 31, 2017.
Answer
| Particulars | Rs. |
| Tax on total income@30% of Rs.4,80,000 | 1,44,000 |
| Less: Rebate under section 87A | (5,000) |
| 1,39,000 |
| Add: Education cess@2% | 2,780 |
| Secondary and higher education cess@1% | 1,390 |
| Total tax liability | 1,43,170 |
*As per section 87A the rebate shall be equal to the amount of income tax payable or an amount of Rs. 5,000, whichever is less.
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About the author
vijay rai
ACCOUNTS AND TAX CONSULTANTS
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