BAJAJ BROKING
July 26, 2024
5 mins read
In this article, we will discuss what a tax rebate is, who is eligible for it, and why the government offers it to certain people. We will go through the different types of rebates and why they are important.Then we will compare the advantages and disadvantages in rebates. We will also cover how to calculate the tax rebate and how to apply for it.
Are you looking to maximize your savings and reduce your tax liability? Discover how you can receive a tax rebate on your income in India. In this guide, we'll break down the eligibility criteria, application process, and tips to ensure you get the most out of your tax rebate. Let's discuss who gets tax rebates in India and why.
A tax rebate is a refund given by the government when you've paid more taxes than you owe. This usually happens when too much tax is deducted from your earnings throughout the year. When you file your tax return, the government calculates your actual tax liability. If you've overpaid, the extra amount is returned to you as a rebate, reducing your overall tax burden.
This system ensures fairness and can provide extra funds for individuals and businesses, encouraging spending or investment in the economy.
Who gets tax rebates? It is for those whose total income is less than 5 lakhs INR in a financial year. If you belong to that category, then congrats, you are eligible for a rebate under Section 87A of the Income Tax Act. The essence of this concept is that, if you are not making that much money, and yet you paid your taxes properly, the government wishes to honor your commitment, and offer you some cashback. That’s about it!
Let us look into the different types of income tax rebates one by one:
1. Section 87A Rebate: This rebate is offered to any person whose income does not exceed 5 lakhs INR annually. However, there is a ceiling on how much rebate can be offered, and the limit is set at 12,500 INR.
2. Agricultural Income: If a taxpayer has any agricultural income and it is within 5,000 INR, it is not added to taxable income. If the amount is more than 5000 INR, the value above 5000 INR will be added to your total taxable income and is taxed at relevant rates.
3. Interest on Home Loan: One can get a rebate on the interest that they have paid for a home loan. The interest payment that is considered for this is limited to 2 lakhs INR under Section 24(b).
Tax rebates act as a major incentive for middle class citizens to file returns and participate in the tax system. While it may seem redundant to collect taxes and then offer rebates, this encourages people to file returns and bring their income under the government supervision.
Advantages:
More Savings: Decreases tax liability, getting more money in your pocket.
Encourages Compliance: Knowing there's a refund, it tends to encourage one to file taxes on time.
Promotes Investment: Some rebates, such as those on home loans, encourage investment in housing.
Disadvantages:
Complexity: The rebate is complicated to understand and hence use.
Limited to Certain Incomes: Not everybody is eligible, and that feels somewhat discriminatory to higher earners.
Policy changes: The tax laws and rebates are dynamic in nature and, hence, difficult to keep track of.
The procedure to get this tax rebate is pretty simple. While filing your ITR, you have to quote the rebate one is eligible for against Section 87A of the Income Tax Act. Just be sure to declare truthfully all of your income and file your ITR on time. Online portals like the e-filing website of the Income Tax Department make it easier.
The income tax rebate is based on some simple math. Say your taxable income is 4,80,000 INR. Rebate allowable under Section 87A is 12,500 INR. Now, if your payable tax is 15,000 INR, you are going to pay only 2,500 INR after the rebate is applied. Simple enough, right?
Comparing the old and new tax systems, the new regime offers lower tax rates but eliminates many exemptions and deductions, simplifying the process. The old regime retains these benefits, potentially reducing taxable income significantly. Choosing between them depends on individual financial situations and preferences for simplicity versus maximizing tax benefits. Careful evaluation of income and deductions is essential for optimal tax planning.
This is where things get a little complicated. Income tax exemption essentially means that certain kinds of income are wholly free from tax, like agricultural income up to 5,000 INR. Income tax deduction means reducing your taxable income through an investment in specified schemes such as PPF or ELSS. Both will bring down your tax liability but work differently.
Basically, the choice between the old and new tax regimes has to be based on individual financial situations. If you have huge investments in tax-saving instruments, then the old one can be more helpful. But if you want simplicity with lower rates, it is the new regime. Consider your income, expenditure, and investment properly before making a choice.
Understanding tax rebates in India can be a headache, but the trouble is worth it. Terms such as tax rebate meaning, income tax exemption, and income tax deduction may help you earn back some money. Whether you stick with the old tax regime or switch to a new one, ensure you claim every rebate you are entitled to. Who does not like extra change jingling in his pocket?
Disclaimer: Investments in the securities market are subject to market risk, read all related documents carefully before investing. This content is for educational purposes only. Securities quoted are exemplary and not recommendatory.
For All Disclaimers Click Here: https://bit.ly/3Tcsfuc
Share this article: 
Share Market Today | Gift Nifty Signals 100-Point Gap Down, Nifty to Consolidate
06 Sep, 2024 | 4 Min. read
KEC International Secures ₹1,423 Cr Transmission Line Order in Saudi Arabia
06 Sep, 2024 | 1 Min. read
Ashoka Buildcon’s Viva Highways Monetises Pune Land for ₹453 Crore
06 Sep, 2024 | 2 Min. read
Peak Partners To Sell 11% Stake in Indigo Paints via Block Deal
06 Sep, 2024 | 2 Min. read
US Initial Jobless Claims Drop to 227,000 in August.
06 Sep, 2024 | 1 Min. read
Commodities Market Today | WTI Crude Steady at $69.18, Gold Rises 0.8% to $2,546
06 Sep, 2024 | 1 Min. read
Gold Rate Today | Gold Rises 0.8% to $2,546, Silver Gains 2% to $29.14
06 Sep, 2024 | 2 Min. read
Vodafone Idea Share Price Falls 11% After Goldman Sachs Report
06 Sep, 2024 | 1 Min. read
Suzlon Energy Share Price Rises After Corporate Office Sale
06 Sep, 2024 | 1 Min. read
Why is the Stock Market Down Today? Key Factors Explained
06 Sep, 2024 | 1 Min. read
Sona BLW Precision Forgings Plans ₹2,400 Crore QIP at ₹675-700 per Share
05 Sep, 2024 | 1 Min. read
Commodities Market Today | Crude Oil Drops, Brent Hits Low; Gold and Silver Rise
05 Sep, 2024 | 1 Min. read
Analysis to Become a Pro Investor
28 Dec, 2023 | 4 Min. read
Women In Real Estate Investing (Investree)
28 Dec, 2023 | 5 Min. read
How To Check Prudent Corporate Advisory IPO Allotment Status
27 Dec, 2023 | 3 Min. read
How To Boost Credit Score? – Steps to Improve Creditworthiness
27 Dec, 2023 | 4 Min. read
Advantages and Disadvantages of Opening Multiple Demat Accounts
26 Dec, 2023 | 4 Min. read
7th CPC LTC: Leave Travel Concession Rules for Central Government Employees
26 Dec, 2023 | 4 Min. read
7th Pay Commission: House Building Advance (HBA) Interest Rate FY 2023-24
26 Dec, 2023 | 5 Min. read
The Future of Trading: Exploring Bajaj Broking’s Demat Features
26 Dec, 2023 | 6 Min. read
7th Central Pay Commission Cpc Fitment Table
23 Dec, 2023 | 7 Min. read
Yes, you can. Under Section 80C, for a housing loan principal repayment, you can get a tax rebate up to ₹1.5 lakh per financial year. Interest payment comes under a different section altogether. It is allowed under Section 24.
As an NRI, he can claim a rebate on income tax by filing his income tax return and claiming deductions under the relevant sections for investments made in India, like 80C. Make sure that you are fulfilling the eligibility criteria for claiming these deductions.
Under the 80C tax rebate, exemption of ₹1.5 lakh could be made on investments and expenses like PPF, EPF, life insurance premiums, tuition fees, etc.
Yes, you are entitled to a rebate on education expenses since tuition fees paid for the education of any of your children will be eligible for deduction under Section 80C up to the aggregate limit of ₹1.5 lakh.
Yes, senior citizens have higher exemption limits and can also claim additional deductions under Sections 80D (for health insurance premiums) and 80TTB (for interest income up to ₹50,000).
Under Section 80C, you can get a tax rebate by investing in PPF, NSC, ELSS mutual funds, fixed deposits, and life insurance policies. Contributions to the NPS will also give you additional deductions under Section 80CCD.
No Result Found
Level up your stock market experience: Download the Bajaj Broking App for effortless investing and trading
TRENDING CALCULATORS AND STOCKS ON BAJAJ BROKING
