Last Update: January 19, 2023, 11:50 AM IST
The Finance Act of 2003 introduced section 87A and amended it from time to time.
If your income does not exceed Rs. 5 lakh, a taxpayer, who is a resident of India, is eligible to avail tax exemption up to Rs. 12,500.
income tax exemption limit in India At present Rs 2.5 lakh is fixed. However, income up to Rs 5 lakh is practically tax-free due to the exemption option available under section 87A. But the tax liability of the individual taxpayer goes up to Rs 5 lakh. Therefore, there has been a long standing demand to increase the income tax exemption limit from Rs 2.5 lakh to Rs 5 lakh.
The Associated Chambers of Commerce and Industry of India (Assocham) has proposed to the Ministry of Finance to increase the income tax exemption limit to Rs 5 lakh in the Union Budget 2023. There is a leg-up in the economy recovery.
The Finance Act of 2003 introduced section 87A and amended it from time to time. If your income does not exceed Rs. 5 lakh, an individual taxpayer, who is a resident of India, is eligible to avail tax exemption up to Rs. 12,500. Once the income reaches this limit, you cannot claim refund under section 87A.
This discount is not available to everyone. However all individuals and HUFs, whether resident or non-resident, are subject to the basic exemption limit of Rs. 2.50 lakh, the exemption under section 87A is available only to an individual, and even then, only if he is resident for income-tax purposes. Therefore, any HUF or non-resident is not eligible for this reimbursement.
The question of what income should be taken into account in order to qualify for this exemption has always been unclear in the minds of taxpayers. Your final tax liability is calculated based on your income. For this reason the income which should be taken into account is the income which is received after setting off all the losses in the past against the income of the current year.
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