Understanding the Eligibility for Rebate under Section 87A in India

When it comes to tax exemptions and benefits in India, many misconceptions arise about the applicability of provisions such as Section 87A to various categories of taxpayers, including artificial judicial persons. This article aims to clarify any doubts surrounding the eligibility of artificial judicial persons for the rebate under Section 87A of the Income Tax Act, 1961.

Overview of Section 87A

Section 87A of the Income Tax Act, 1961, provides a tax rebate to resident individuals whose total income does not exceed a certain threshold. Specifically, an individual resident in India whose total income does not exceed three hundred and fifty thousand rupees is entitled to a deduction from the amount of income-tax on his total income, with this deduction capped at the lesser of two thousand and five hundred rupees or one hundred per cent of the income-tax. This provision aims to provide tax relief to individuals with lower incomes.

Eligibility Criteria for Individual Taxpayers

For individuals to be eligible for the rebate under Section 87A:

They must be residents of India. Their total income should not exceed three hundred and fifty thousand rupees for the assessment year. The rebate amount is computed as the lesser of two thousand and five hundred rupees or one hundred per cent of the income-tax computed before deductions under this Chapter.

Exclusion of Artificial Judicial Persons

One key point to note is that the rebate under Section 87A is specifically for individuals, and it excludes artificial judicial persons. Artificial judicial persons, such as companies and other legal entities, are governed by different tax provisions and regulations. Therefore, they do not qualify for the tax rebates meant for individual taxpayers under Section 87A.

Clarifying Common Misunderstandings

There are some common misconceptions about the applicability of Section 87A to artificial judicial persons and other types of entities. Let us address these:

Myth: Artifical Judicial Persons Can Claim the Rebate Under Section 87A

The rebate from tax under Section 87A of the Income Tax Act 1961 is available only to individual residents of India and not to any other entities, including artificial judicial persons.

Myth: Section 87A Applies to All Types of Taxpayers

While Section 87A is designed to provide relief to individuals with lower incomes, it does not extend to artificial judicial persons or any other type of legal entity. The provision is strictly for individual taxpayers within the specified income threshold.

Conclusion

Given the specific provisions outlined in Section 87A of the Income Tax Act, 1961, it is clear that the rebate is not available to artificial judicial persons or other forms of legal entities. The provision is designed to benefit individual taxpayers with lower income levels, ensuring that the tax regime in India is equitable and fair.

For artificial judicial persons and other legal entities, there are different tax provisions and benefits available that cater to their specific needs and circumstances. Consulting with a tax expert or a tax professional can help in understanding the applicable provisions and maximizing tax benefits within the legal framework.