Presently, rebate is allowed u/s 87A of Rs. 12,500/- in old regime of Income Tax, if any resident individual whose total income during the previous year does not exceed Rs. 5,00,000. Rebate is available only to the extent of Rs.12,500, and if total income exceeds Rs. 5,00,000 no rebate will be available.
Section 87A rebate does not allow in old regime if your income go above 5,00,000.
Provided that where the total income of the assessee is chargeable to tax under sub-section (1A) of section 115BAC, and the total income—
(a) Does not exceed seven hundred thousand rupees, the assessee shall be entitled to a deduction from the amount of income-tax (as computed before allowing for the deductions under this Chapter) on his total income with which he is chargeable for any assessment year, of an amount equal to one hundred per cent of such income-tax or an amount of twenty-five thousand rupees, whichever is less;
(b) Exceeds seven hundred thousand rupees and the income-tax payable on such total income exceeds the amount by which the total income is in excess of seven hundred thousand rupees, the assessee 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, of an amount equal to the amount by which the income-tax payable on such total income is in excess of the amount by which the total income exceeds seven hundred thousand rupees.
Wherein it is provided for higher rebate to Individual, HUF, Association of Person (AOP), BOI & artificial jurisdictional person who opting for the new tax regime u/s. 115BAC(1A) of the Income Tax Act. A rebate u/s. 87A is available if his total income during the previous year does not exceed Rs.7,00,000. Rebate is available to the extent of Rs.25,000, and no rebate will be available if total income exceeds Rs.7,00,000.
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After insertion of the above proviso, if the income of the individual increase slightly more than Rs.7,00,000, then tax rebate will be available and the assessee has to pay tax on the total addition income earned. The situation may help to avoid the situation where the additional tax jumped in old regime.
Conclusion- After analysis of both the scheme new marginal scheme (U/s-87) is more attractive and tax beneficial.
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