Rebate u/s 87A if total income less than Rs 3.5 lakh

SC Vasudeva

Q.  Please guide in respect of rebate under Section 87A. As per my understanding, this rebate is available to individual salaried persons. If so, whether the rebate is available to employees whose total income for the FY 2016-17 (AY 2017-18) is less than Rs 5 lakh or taxable income is less than Rs 5 lakh? — Mohinder Sharma

A.   Rebate under Section 87A of the Act is allowable to an individual resident in India whose total income does not exceed Rs 3,50,000 from the amount of income-tax (as computed before allowing deduction under Chapter VIII of the Act) on his total income,  which is chargeable for any assessment year, to the extent of 100% of such income-tax or an amount of Rs 2,500, whichever is less. The limit of Rs 5 lakh was reduced to Rs 3,50,000 for assessment year 2018-19 i.e. in respect of income earned for financial year 2017-18.

Q. Interest earned in an NRO savings account is only Rs 300 in a year. The TDS has been deducted and Form 26 AS shows this amount. For this low amount, which is the only income, if an NRI does not want to claim refund, can he desist from filing IT return? In routine, the IT Department seems to send reminders if the IT return is not filed. Is it necessary by any law to file return for such a low income, merely to claim the refund? Please clarify.       — DS Rao

A.   According to the provisions of Section 139 of the Income-tax Act, 1961 (the Act), an individual assessee is required to file an income-tax return whose total income exceed the maximum limit which is not chargeable to income-tax. In case of an individual who is below 60 years of age, the maximum amount which is not chargeable to tax for assessment year 2018-19 as well as 2019-20 is Rs 2,50,000. Therefore, in case of an NRI individual who is not having total income beyond the amount specified above need not file an income-tax return.

Q. Kindly guide how to prove that agricultural operations were being carried on the urban agricultural land for the past two years when the said land was compulsorily acquired by the National Highways Authority of India (NHAI) as the land was a piece of 2,500 sq yds and limited agriculture was being done mostly for self- consumption. The land was acquired in 2005. Whether any TDS is to be deducted by the NHAI while disbursing enhanced compensation and interest for delayed period? Also guide regarding tax liability of compensation. — Sanjeev Goyal

A.   Your queries are replied hereunder:

a) The following evidence may be essential to prove that the agricultural operations were actually carried on the urban agricultural land for the past two years:

1. Revenue records indicating the particular crop/vegetables being grown on such agricultural land

2.  Supporting documents for purchase of seeds for such crop

3. Supporting evidence for manure utilised for cultivation

4. Supporting evidence for  wages paid to labour employed for the said purpose

5. Total quantity of crop produced to prove that the same was sufficient for self-consumption

6. Books of account, if any, maintained for determining the agricultural income

These evidences may be sufficient to prove that the agricultural operations have been carried out on the urban agricultural land.

b)   In case you are not entitled to claim exemption under Section 10(37) of the Act because you  are not able to comply with the conditions specified therein, capital gain arising on such compulsory acquisition shall be taxable under Section 45 of the Act. The NHAI will have to deduct tax in case the amount of capital gain is taxable. 

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