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How to Understand the Section 87A Income Tax Act


The intricacies of the Income Tax Act Section 87A can often seem like a labyrinth of legal jargon, leaving individuals bewildered. However, understanding the basics of this significant legislation is not only empowering but crucial for making informed financial decisions. In this quest for knowledge, StudyByTech emerges as a beacon, providing expert guidance through online and offline classes for aspiring Chartered Accountants.

Understanding the Basics Income Tax Act Section 87A

The Income Tax Act is a comprehensive document that governs taxation in India. To navigate its complexities, one must start with the basics. For resident individuals with a total income not exceeding Rs. 5,00,000, there’s a golden opportunity to claim a rebate under Section 87A. This provision can significantly reduce tax liabilities, and understanding its nuances is a smart move for individuals seeking financial optimization.

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Who is eligible for rebate under section 87A?

If an individual taxpayer’s total taxable income for a given financial year does not reach the threshold limit of Rs. 5,00,000, he is eligible for a tax advantage under rebate u/s 87A. It indicates that a person will not be eligible to receive tax relief under section 87A if his total taxable income exceeds Rs. 5,00,000.

How 7 lakh income is tax-free?

The employer’s payment to the National Pension System, or NPS, is covered by section 80CCD (2), in addition to the standard deduction. A person with taxable income up to Rs 7.5 lakh will pay no tax due to the standard deduction benefit.

What is 87A marginal relief?

Section 87A marginal relief is a provision that ensures a gradual reduction in the rebate under Section 87A as an individual’s income approaches the threshold, preventing a sudden loss of the benefit.

Is Section 87A applicable for AY 2023-24?

(a) A resident individual (whose net income does not exceed Rs. 5,00,000) may be eligible for a refund under section 87A for Assessment Year 2023–2024.

What is the new income tax rule 2023?

The updated basic exemption level is INR 3,00,000. The next slab rate will apply for each additional INR 3,00,000 of income. For income exceeding INR 15,00,000, the maximum slab rate of 30% will still be in effect.

What is the new regime tax rebate?

Income up to Rs 7 lakh would be tax-free from FY 2023–2024 due to an increase in the refund under the new regime, which was announced in Budget 2023.

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