Income Tax Return Filing - Rs. 999

Pay Zero Income Tax on Income upto 5 Lakh - New Income Tax Amendment

By Agam Gupta

( 5.76K Views) July 17, 2019

If you are income tax payer in India, then we have good news for you as the finance bill 2019 has come up to with zero income tax if your total income does not exceed Rs.5 lakh. In simple words, if you earning up to five lakhs, then you need not pay any tax to the government but still, the income tax return needs to be filed.

Let us understand this in a bit details;

Section 87A – Rebate up to Rs.12,500

First of all, we would like to clear that the government has not changed the income tax slabs, yet you will have to pay zero tax if your total income is up to Rs. 500,000. This has been done by amending the section 87A, i.e. Income tax rebate.

You must be familiar with this section, if not, don’t worry, we will explain it. Section 87A is an income tax rebate which is given to the assessee whose total income does not exceed Rs. 500,000/-. The total amount of rebate given is Rs.12,500/-.

However, if the total income crosses the upper limit of Rs. 500,000/-, then section 87A shall not be applicable. Let us understand the basic example;

Total Taxable Income (Rs.)	3 Lakh	5 Lakh	5.5 Lakh
Tax on above income	2,500	12,500	22,500
Less: Rebate 87A	2,500	12,500	0
Total Tax payable before cess	0	0	22,500

Now, did you understand what we are trying to say for the upper limit of Rs. 500,000? It simply means that your total income must be up to five lakh to claim the exemption under section 87A.

How to claim the rebate of Rs.12,500 under ITR?

If you want to claim the exemption, then you will have to file the income tax return. Further, when you file your income tax return, you don’t need to do anything extra, because the system will automatically give you the rebate if you are eligible.

If the filing of Income Tax Return is mandatory if my tax is zero?

This is perhaps the most important question because many people think that if total tax payable is zero, then there is no need to file the income tax return but that is not true.

An income tax return is required to be filed if the total income of the assessee crosses the minimum threshold limit of the slab, i.e. Rs.250,000, without giving effect to any deduction or rebate.

Let us understand it with the help of the example;

Total Income	240,000	300,000	500,000
Less: Deduction 80C	100,000	100,000	100,000
Total taxable income	140,000	200,000	400,000
Tax slab	250,000	250,000	250,000
Total tax on the above income	Nil	Nil	7,500
Less: Rebate 87A	-	-	7,500
Net Tax to be Paid	-	-	-
Whether ITR to be filed?	No	Yes	Yes

So, now you can understand that ITR is only required to be filed for cases B and C because the gross income was more than the basic exemption limit of Rs. 250,000/-.

Applicability

The applicability of this amendment shall be for the financial year 2019-20. The provision applicable for the financial year 2018-19 is as completely same except that the total rebate allowed does not exceed Rs.2,500/- and total income (upper limit) shall not exceed Rs. 350,000/-

Conclusion

If you have any doubt regarding this section or you want to plan your taxes, then please contact us ITR filing experts.