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Everything you need to know about Income tax rebate

Everything you need to know about Income tax rebate

Income tax rebate

Governments impose taxes on their citizens to generate revenue which helps in the overall development of the nation by augmenting the public exchequer. India's Income Tax fee is very progressive, which means the more you earn, the more you will have to pay. The regular tax-filing period in India begins in the month of early January and lasts till the end of financial year.

The citizens of India are required to pay tax as per Income Tax Act of India. While filing an Income Tax return, you may see a lot of people who are confused and stressed about the nuanced provisions. If you are also one of them, then you need to know that you are not alone.

The tax filing process might seem too tedious and cumbersome to a starter, but don't panic. Here's everything you need to know about income tax rebate -

What is income tax rebate?

Income tax rebate is a refund on taxes if the tax paid by an individual is more than the tax liability. In other words, you will avail a refund on tax money at the end of every financial year if your tax liability is less than that of the amount paid by you. You need to file an Income Tax Rebate within a specified period if you want to claim the income tax refund.

How to get income tax rebate?

The only way to get income tax rebate is through filing an ITR at the end of the fiscal year. Although, there can be few cases –

  • If your gross income is less than 5 Lakhs, then in that case filing an ITR will be useful.
  • But, if your gross income is more than 5 Lakhs, then you will have to take the help of a tax deduction system that comes under Section 80C, Section 80D, 80CCD, etc. to reduce your taxable income.
  • Also, people with a gross income of up to 5 Lakhs need to know that they are also eligible for a full tax rebate.

What are the key points of Section 87A income tax rebate?

  • As per section 87A of the Income Tax Act, both men and women are liable to pay rebates as long as their income falls under the income tax bracket.
  • This applies only to the citizens of India. If you are a non-resident of India, then you cannot apply for a tax rebate as per Section 87A of the Income Tax Act. To prove your citizenship, you need to have an Aadhar Card or birth certificate.
  • Rebate advantage is not for senior citizens who are above 60 – You are not eligible to file an income rebate if you are a senior citizen who is above 60 years of age.
  • As per the act, only a 'person' can apply for a tax rebate. Hence, only an individual can apply for a tax rebate, not firms or companies.

What are the types of ITRs in India?

Here're the types of Income Tax Rebates in India -

Section 80C – A lot of taxpayers prefer section 80C of the Income Tax Act as this section cut down the taxable income by Rs. 1 Lakh. Also, people are allowed for a tax rebate of the following expenses –

  • ELSS
  • Life Insurance Premium
  • Annuity or pension fund
  • Bank fixed deposits (5-year)
  • PPF, NSC, SCSS deposits
  • Stamp duty and registration on buying a house

Section 80D – If you are making payment under health insurance premium, then you will get tax rebate under section 80D of the Income Tax Act.

For every citizen of India, it is advisable to pay income tax before its due date. Failing to do so would lead to several consequences such as heavy fines and imprisonment under the IT Act. Besides, for those who are planning to buy tax saving plan online, you choose to go with Canara HSBC OBC Life Insurance for better options.

Speak to an insurance specialist now!

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