Army Institute of Law, Mohali: Provisions Relating To Rebates Under The Income Tax Act, 1961 A Project Submitted To
Army Institute of Law, Mohali: Provisions Relating To Rebates Under The Income Tax Act, 1961 A Project Submitted To
Army Institute of Law, Mohali: Provisions Relating To Rebates Under The Income Tax Act, 1961 A Project Submitted To
By
(AYUSHI JARYAL Roll No. – 1827)
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ACKNOWLEDGEMENT
This project would not have been possible without the kind support and help of my
teacher Dr. Pooja Jaiswal. I would like to extend my sincere gratitude to her for giving me the
UNDER THE INCOME TAX ACT,1961” which is not only enriching and interesting but
also a means to enhancing my patience and hard work. I am also highly indebted to Army
Institute of Law, Mohali and the library staff for their guidance and constant supervision as
well as for providing necessary information regarding the project & also for their supporting
I would also like to express my gratitude towards my parents and friends for their kind
cooperation and encouragement which helped me in completion of the project in the limited
time frame.
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INTRODUCTION
Income tax as a concept has been present in India for many years, but James Wilson who
became India’s first finance (British) member introduced the first modern Income Tax Act in
1860. “It was only for the good of his subjects that he collected taxes from them, just as the
Sun draws moisture from the Earth to give it back a thousand fold,” wrote Kalidas in his epic
poem Raghuvansh.1
Income tax in India is a tax you pay to the government based on your income (and profit, in
the case of companies). The government uses this tax money for various purposes including
public services, infrastructure development, defence spending and subsidies among other
options. If you earn income beyond a certain limit, it is mandatory to pay income tax every
year.
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https://www.aegonlife.com/insurance-investment-knowledge/income-tax-act-1961/#_ftn1
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https://incometaxindia.gov.in/
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Such amendments become a part of the Income Tax Act from the following financial year
(beginning from 1st April) following the approval from the President of India.
From FY 2020-21, taxpayers shall have the option to choose between the existing taxation
system and the new regime. The new system has revised the income slabs and reduced the
rates thereon. Another major change in the new scheme is that many of the deductions and
exemptions generally applicable in the old tax regime are no longer valid. Nearly 70 of the
100 or so existing deductions and exemptions are to be scrapped in the new regime.
Taxpayers can compare their tax liabilities under the two systems and opt for the one that’s
most beneficial to them.
For the financial year 2019-20, taxpayers shall continue to be governed by the old tax system,
under which all existing deductions can be claimed.
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1. Section 80C to 80: Under Section 80C3, 80CCC4 & 80CCD5 of the Income Tax Act
1961, you can reduce your taxable income by 1,50,000
2. Section 80CCD: Section 80CCD of the Income Tax Act, 1961 focuses on income tax
deductions that individual income tax assesses are eligible to avail on contributions
made towards the New Pension Scheme (NPS) and Atal Pension Yojana (APY)
3. Section 80D: Under section 80D6, you can claim income tax deduction for medical
expenses and health insurance premiums
4. Section 80DD: Tax deduction under Section 80DD7 of the Income Tax Act can be
claimed by individuals who are residents of India and HUFs for the medical treatment
of a dependant with disability(ies) or differently abled
5. Section 80DDB: Tax deductions under section 80DDB8 of Income Tax Act 1961 can
be claimed for medical expenses incurred for medical treatment of specific illnesses
6. Section 80TTA: Section 80TTA9 provides a deduction of Rs 10,000 on interest
income. This deduction is available to an Individual and HUF.
7. Section 80U: Under Section 80U10, physically disabled persons can claim deductions
up to Rs.1,00,000.
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Deduction in respect of life insurance premia, deferred annuity, contributions to provident fund, subscription to
certain equity shares or debentures, etc.
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Deduction in respect of contribution to certain pension funds.
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Deduction in respect of contribution to pension scheme of Central Government.
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Deduction in respect of health insurance premia.
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Deduction in respect of maintenance including medical treatment of a dependant who is a person with
disability
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Deduction in respect of medical treatment, etc.
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Deduction in respect of interest on deposits in savings account.
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Deduction in case of a person with disability.
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Rebate of income-tax in case of certain individuals.
87A. An assessee, being an individual resident in India, whose total income does not exceed [five hundred
thousand] rupees, shall be entitled to a deduction, from the amount of income-tax (as computed before allowing
the deductions under this Chapter) on his total income with which he is chargeable for any assessment year, of
an amount equal to hundred per cent of such income-tax or an amount of [twelve thousand and five hundred]
rupees, whichever is less.
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Act, was inserted by the Finance Act, 2013, to provide tax relief to individual taxpayers.
Rebate under Section 87A provides for a lower tax payment from individuals earning below a
specified limit.
According to the Income Tax Department, “An individual who is resident in India and whose
total income does not exceed Rs. 3,50,000 is entitled to claim rebate under section 87A.
Rebate under section 87A is available in the form of deduction from the tax liability. Rebate
under section 87A will be lower of 100% of income-tax liability or Rs. 2,500. In other words,
if the tax liability exceeds Rs. 2,500, rebate will be available to the extent of Rs. 2,500 only
and no rebate will be available if the total income (i.e. taxable income) exceeds Rs.
3,50,000.”
The following are some of the noteworthy points of Section 87A of the Income Tax Act,
1961:
The amount of deduction that can be claimed under this section is either 100% of the
income tax liability or Rs. 2,500 (whichever is lower).
The rebate is applicable to total tax prior to adding the educational cess of 4%.
Only individuals are eligible to avail rebate under this section. Companies, firms or
Hindu Undivided Family cannot claim this rebate.
Rebate benefit is available to senior citizens (individuals above the age of 60 years
and below 80 years)
Super senior citizens (individuals above the age of 80 years) are not eligible for a
rebate under Section 87A.
Only Indian residents are permitted to claim this rebate, NRIs are not allowed rebate
under Section 87A.
Claiming Refund under Section 87A of the Income Tax Act, 1961
A rebate under this section is allowed to taxpayers - being a resident individual - whose net
total income is below Rs. 3,50,000. The rebate available is up to Rs. 2,500 or 100% of
the income tax, whichever is lesser. The taxpayer can claim the rebate at the time of filing tax
returns, prior to including education cess, secondary and higher education cess.
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