Section 87A tax rebate is a significant relief for eligible taxpayers.
The Income Tax Department’s update regarding Section 87A tax rebate is a significant relief for eligible taxpayers. The Income Tax Department has updated ITR forms for FY 2023-24 to ensure eligible taxpayers can claim the Section 87A rebate, a crucial relief for individuals with modest taxable incomes.
What Is the Section 87A Rebate?
- Eligibility: Available to taxpayers whose net taxable income (post deductions) does not exceed:
- INR 5,00,000 under the old tax regime.
- INR 7,00,000 under the new tax regime.
- Rebate Amount: Reduces your tax liability by up to INR 12,500, effectively bringing it down to zero if eligible.
Key Points on Section 87A tax rebate is a significant relief for eligible taxpayers. – INCOME TAX PORTAL UPDATE:
Here’s a summary of the development and the necessary steps to claim the rebate for FY 2023-24 (AY 2024-25):
- ITR-2 & ITR-3 3 (Excel-based Utility) has been updated. However, JSON schema has still not been updated after 05.07.2024. It means only belated & revised filing has been enabled yet for ITR-2 & ITR-3 (without 87A rebate claim in new regime).
- Update to ITR Utilities: Excel Utilities: Updated to enable taxpayers to claim the Section 87A tax rebate. and HTML Utilities: To be updated and released shortly.
- Eligibility for Section 87A: Applicable to individuals whose total taxable income does not exceed ₹5,00,000. and Eligible taxpayers can claim a rebate of up to ₹12,500 under the new tax regime.
- Manual Adjustment Required: In the Excel utility, taxpayers must manually edit the “Tax Rebate” column under Section 87A to claim the rebate. If left on auto-fill, the rebate may not be applied correctly.
- The Income Tax Department had changed Excel Utility to Update the Rebate u/s 87A but it doesn’t means Department had allowed Rebate u/s 87A and that’s why the wording in the income tax portal were “The updated utilities for ITR Forms 2 and 3 to exercise the option to update 87A rebate for AY 2024-25 will be made available shortly.”
Pic 1
The Utility is calculating tax without giving rebate against special income as earlier but the tax payer can edit the rebate manually
Pic 2
Edited the Rebate amount manually to the extent of tax
Pic 3
Screenshot of earlier utility where rebate amount was non editable
Steps to Claim Section 87A Rebate in Excel Utility
- Check Your eligibility:
- Compute your total income.
- Subtract applicable deductions like those under Section 80C, 80D, etc.
- Ensure the resulting taxable income falls within the prescribed limit.
- Open the updated Excel utility for ITR Forms 2 or 3.
- Choose the Correct ITR Form:
- ITR-1 (Sahaj): For salaried individuals with income up to ₹50 lakhs, excluding capital gains.
- ITR-2: For individuals with income from capital gains.
- ITR-3: For individuals with income from business/profession.
- Download the updated ITR utility:
- Navigate to the tax rebate section under Section 87A. Access the latest Excel/JSON utility from the Income Tax e-filing portal. Manually enter the eligible rebate amount (up to ₹12,500).
- Fill in Your Income and Tax Details:
- Accurately report income from all sources.
- Declare deductions under Chapter VI-A (e.g., 80C, 80D).
- Claim the Section 87A Rebate:
- Validate the entries to ensure there are no errors. For updated excel utilities, manually edit the rebate field under Section 87A if the auto-fill option doesn’t apply.
- Proceed with the remaining sections of the ITR and file accordingly. For upcoming HTML utilities, verify if the rebate is auto-applied.
- Validate and Submit:
- Validate your entries using the utility’s in-built features.
- Generate and upload the XML or JSON file on the Income Tax e-filing portal.
Important Notes on section 87A :
- Old vs. New Tax Regime: The rebate applies under both regimes as long as taxable income limits are met. and Evaluate which regime is more beneficial before filing.
- Avoid Errors: Double-check your income calculations and deductions. Ensure accuracy in the rebate column, especially when using manual entry in the excel utility. taxpayer Ensure accurate calculations and manual input to avoid discrepancies. Double-check all inputs before validation and submission. Await HTML Utility Update: Taxpayers preferring the HTML utility should wait until the updated version is released.
- Filing Deadline: The last date to file ITR for FY 2023-24 is 31st July 2025 (subject to extensions)
If you need help with the updated utility or manual adjustment, feel free to ask on 9555 555 480 or singh@carajput.com !
Rajput Jain & AssociatesRajput Jain & Associates is a Chartered Accountants firm, with it's headquarter situated at New Delhi (the capital of India). The firm has been set up by a group of young, enthusiastic, highly skilled and motivated professionals who have taken experience from top consulting firms and are extensively experienced in their chosen fields has providing a wide array of Accounting, Auditing, Taxation, Assurance and Business advisory services to various clients and their stakeholders.
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