Ambiguity in interpretation of rebate/relief rs. 2000 as per

SURESHAN K (Auditor) (189 Points)
Replied 29 March 2014

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 two thousand rupees, whichever is less.

It is a deduction from the amount of income tax on total income which should be considered while making TDS. There is no authority for employers argument.

Total income means income after chapter VIA deductions ie. net income

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Mihir (Wealth Manager) (5293 Points)
Replied 29 March 2014

Lot of people are confused regarding this provision. Employers wants to deduct TDS thinking that they might receive a short TDS deduction notice, whereas employees do not want to pay more tax today only to receive a refund a few months after. But if we look at the technical definition of rebate, it is "pay back a sum of money". Here the wording says that the tax paid by the assessee, shall be eligible for a refund of Rs. 2000/- provided the conditions laid down u/s 87A are fulfilled. Therefore, the section is treating an assessee eligible to receive a refund. This is just my interpretation. I maybe wrong.

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Ravi (Nothing Is Impossible To A Willing Heart) (120 Points)
Replied 31 March 2014

Hi All,

The following links/attachments may give you clear picture of Sec. 87A Deduction. Pls go through:

1. Attachment: Open the attachment & Type Password: aubsp

2. Go to this web address: https://www.charteredclub.com/section-87a-rebate/

Sources: AUBSP.com; Chartered Club.com

Thanks & Regards,

Ravi

Attached File : 96924 1303020 aubsp section 87a tax rebate upto rs 2000 for resident individual.pdf downloaded: 229 times

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Ravindra K. Banthia (Others) (26 Points)
Replied 01 April 2014

Thank you, so much every one.

I have understood the mechanics of the calculation.

My question is as follows:

Final Tax @ 10 % with 3% cess = 21,637 (more than Rs 2000, even without the cess)

My employer (the college) insists on collecting this whole amount from me.

I wish to know whether the deduction of Rs. 2000 as per Section 87A has to be given by me as TDS to my employer?

My employer insists that the above rebate of Rs. 2000 can only be obtained by me as a refund when I file my online income Tax return.

In other words, he says that he will cut the the Rs. 2000 from my salary as TDS.

Ravindra K. Banthia (Others) (26 Points)
Replied 01 April 2014

Originally posted by : e.filer B.Com/ Hyderabad
	RAVINDRA,YOU did not understand anything. Consult a CA OR the CA of your college personally. Otherwise yu are vasting (y)our? time.

Sorry that you feel offended. I am not a CA or a B. Com, but I happen to be an IITian.

Mr. SURESHAN K and Mihir have understood my dilemma.

Unfortunately their opions are different.

The former says that my employer does not have the right to cut Rs. 2000 from my salary, while the latter says that the Rs. 2000 will be given back to as a refund after filing my tax return.

Siddharth (Student) (128 Points)
Replied 01 April 2014

Hi,

TDS should be deducted net of rebate. No need of paying and claiming refund of the same. Instead ask ur employer to consider rebate of Rs.2,000 before deducting TDS.

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