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A lot of taxpayers are expecting that annual income up to Rs.12lakhs would be exempted from income tax but that’s definitely not the case because not all incomes up to Rs.12lakhs would be tax free. Some incomes such as gains from selling a property known as capital gains tax does not come under these new tax law of sec 87a rebate.
How 87A Works
According to new tax law, if an individual is earning up to Rs.12Lakhs annually he/she can claim for full tax rebate under section 87A.
This definitely came as a financial relief for salaried individuals considering almost Rs.75k in deduction.
Conditions Where You Still Need to Pay Tax
If individuals salary parts are taxed at special rates, then you’re not eligible for tax rebate
For Example
If you’re earning around Rs.8lakhs in salaries and other sources and you somehow make/earn Rs.4lakhs from short-term capital gains or mutual funds, then you’ll get rebate in income of Rs.8lakhs but still need to pay Rs.80k as income tax on that Rs.4lakhs income at20% income tax
