Pay Zero Tax in Old Tax Regime: Know more
Tax planning is a very essential part of financial management for many Indian people. Section 87A of the Income Tax Act provides significant benefits to taxpayers, allowing eligible individuals to reduce their tax liability to zero, if their income falls within a specific range.
Section 87A
The Indian residents whose total income falls under the threshold are provided a rebate under Section 87A. The entry has been set to Rs.5 lakh for the year 2023-2024. This means that after deductions your total taxable income is up to Rs.5 lakh, then you can avail of a rebate which will effectively nullify your tax liability.
Knowing the eligibility criteria
You must follow these conditions to qualify for the Section 87A:
1. The taxpayer should be a resident individual.
2. The income, after all the deductions that come under Chapter VI-A should not be more than Rs. 5 lakh.
Strategy
If you want to take advantage of the Section 87A rebate you’ll need the proper financial planning. Some of the tips are:
1. Maximise the deductions: Make sure that you claim all the deductions under various sections such as 80C, 80D etc., so that your taxable income comes under the limit Rs 5 lakh.
2. Investments that save tax: You can save in instruments like PPF, NSC, ELSS, and insurance premiums that will allow you for deductions.
3. Health insurance: Premium paying of health insurance provides security as well as qualifies you for the deductions under Section 80D.
Conclusion
The rebate under Section 87A provided relief to so many taxpayers and made sure that every individual with an income of up to Rs. 5 lakh pays zero tax. Understanding properly and making proper planning can help you to get this benefit, allowing you to keep more of your hard-earned money.
