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With the due date for submitting revenue tax return (ITR) approaching, taxpayers are in a state of confusion relating to the rebate beneath Part 87A of the Revenue Tax Act. One of many essential causes for that is the final price range 2025 announcement, which had sought to boost the rebate to Rs 60,000. However, it doesn’t apply throughout the present ITR submitting season.
What’s ITR Rebate?
An ITR rebate is a discount in your whole tax payable after you’ve calculated your revenue tax legal responsibility. It is sort of a remaining low cost supplied by the federal government to cut back your tax burden, however provided that your revenue falls inside a specified restrict. Essentially the most generally used rebate is beneath Part 87A, which advantages small taxpayers. After your whole tax is set in response to your revenue slab, this rebate is deducted, decreasing your ending tax legal responsibility at instances to zero.
What’s Part 87A
Part 87A of the Revenue Tax Act offers a rebate in tax payable, not in revenue. The situation? Your mixture taxable revenue ought to be beneath a restrict specified. In FY 2024-25, if you’re reporting beneath the previous regime and your revenue is beneath Rs 5 lakh, you obtain a rebate of Rs 12,500. In case you select the brand new regime, and your revenue is as much as Rs 7 lakh, you are entitled to a rebate of Rs 25,000. The rebate might be availed by resident people and will likely be deducted after arriving at your tax, and never earlier than.
What rebate is out there now?
You’re at the moment submitting your ITR for revenue earned throughout the monetary 12 months 2024-25 (Evaluation Yr 2025-26). The principles relevant listed below are based mostly on Price range 2024, not Price range 2025.
Right here’s the Part 87A rebate you possibly can really declare this 12 months:
Right here’s the small, clear desk summarising the Part 87A rebate for FY 2024-25 (AY 2025-26):
| Tax Regime | Relevant FY (AY) | Whole Revenue Restrict for Rebate | Most Rebate |
|---|---|---|---|
| Outdated Tax Regime | FY 2024–25 (AY 2025–26) | As much as Rs 5,00,000 | Rs 12,500 |
| New Tax Regime | FY 2024–25 (AY 2025–26) | As much as Rs 7,00,000 | Rs 25,000 |
Rs 60,000 rebate? That’s for subsequent 12 months
The Rs 60,000 rebate beneath Part 87A introduced in Price range 2025 will apply solely to revenue earned in FY 2025-26. It is possible for you to to assert it subsequent 12 months whereas submitting returns for AY 2026-27.
Till then, follow the present limits Rs 12,500 beneath the previous regime and Rs 25,000 beneath the brand new regime.
What in case your revenue barely exceeds Rs 7 lakh?
The brand new regime additionally affords marginal aid. In case your whole revenue barely crosses Rs 7,00,000 and the tax payable exceeds the extra revenue above Rs 7 lakh, you possibly can nonetheless declare a rebate equal to the surplus tax over Rs 7 lakh revenue. This ensures you don’t lose all advantages for incomes just some rupees extra.