The Government of India allows you to avail rebate of tax to encourage savings and investment, especially if you belong to the middle-income group. It refers to a refund that you can get if you have paid more income tax than that you owe.
Understanding these rebates is crucial as they can help you reduce your total tax liability. To know the definition of a tax rebate, how you qualify for one and how to claim it, read on.
It refers to a benefit that you can get to reduce your total tax liability. Several sections of the Income Tax Act of 1961 provide for rebates of tax available for specific investments and expenditures under the old tax regime.
These offer a variety of options to reduce your tax burden and incentivise responsible financial decisions. The following are the rebates you can enjoy under different sections of the Income Tax Act of 1961-
It provides for a rebate of up to ₹25,000 on a total taxable income of up to ₹7 lakhs under the new tax regime. The old tax regime allows individuals to claim a relief of up to ₹12,500 with a total taxable income of up to ₹5 lakhs.
This provision allows a deduction of up to ₹1.5 lakhs for investments in specific financial instruments. These include the Public Provident Fund (PPF), Employee Provident Fund (EPF), National Savings Certificates (NSC) and more.
It allows you to enjoy tax relief on premiums paid for health insurance for yourself, your spouse or your parents.
It allows you to claim a deduction of up to ₹2 lakhs each financial year towards the payments made for interest on home loans.
You can get this rebate on the interest component of education loans for a maximum of 8 years.
You can claim this rebate for donations made to specified charitable organisations. However, these deductions are also subject to certain limits.
Also Read: Different Types of Assessment in Income Tax
The Indian tax system offers two options for filing your returns. The introduction of the new tax regime has provided a simplified structure. You have to forego 70 tax exemptions and deductions if you opt for this taxation regime. Check out the available tax rebate under the new tax regime-
The Income Tax Act of 1961 allows you to get your rightful tax benefit. Follow these steps to claim a tax rebate-
Understand if you qualify for a tax rebate, which depends on factors like your residential status and total income.
Review the deductions that lower your taxable income and potentially increase your eligibility for certain rebates.
Research the different rebate sections to find the one that best applies to your situation.
Each rebate section may require specific documents as proof of eligibility. Gathering these documents beforehand ensures a smooth filing process.
File your ITR online or offline on the official website to receive applicable tax benefits.
Also Read: How To Claim Income Tax Refund Online For TDS
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It refers to a refund that you can get if you pay more tax than your liability. Check out a tax rebate example below-
Follow these simple steps to compute tax relief-
The Union Budget 2023 allowed taxpayers with taxable income of up to ₹7 lakhs to enjoy tax rebates under the new tax regime.
As per Section 87A of the Income Tax Act, you can enjoy tax relief if your income does not exceed a certain limit.
