Taxable Income,
New Tax Regime, 
Income-tax Act
Taxable Income, New Tax Regime, Income-tax Act

Rebate Of Rs 12,500 Only Available To Individuals With Taxable Income Not Exceeding Rs 5 Lakh

For the new tax regime, the threshold limit is Rs 7 lakh and the rebate available is Rs 25,000. Income earned on amount gifted to daughter-in-law will be added to your income under Section 64 of the Income-tax Act, 1961. You can claim the interest paid on gold loan under Section 24(b) if you can prove that the loan was used for buying a house
Q

Since there is a rebate of Rs 12,500 available under Section 87A of the Income-tax Act, 1961 for income up to Rs 5 lakh, does it mean that the basic exemption limit has gone up to Rs 5 lakh? My taxable income is Rs 7.5 lakh. How will my tax liability be computed? I am 35 years old.

A

No, the exemption limits have not gone up due to rebate available under Section

87A. The rebate of Rs 12,500 under the section is available only to a resident individual whose total income i.e., the taxable income after allowing all the deductions under various sections of chapter VIA like Section 80C (for life insurance premium, provident fund, school fees, repayment of home loan, investment in National Savings Certificate, etc), U/S 80 D for medical insurance, under Section 80TTA for interest on saving bank account) does not exceed Rs 5 lakh, but under the old tax regime.

For the new tax regime, the threshold limit is Rs 7 lakh and the rebate available also goes up to Rs 25,000. The rebate is available only to the extent of your tax liability, but limited to Rs 12,500 and Rs 25,000 under the old and new tax regime, respectively.

Thus, you cannot claim any tax refund if your tax liability is less than the amount of maximum rebate available. Since your taxable income is more than Rs 7 lakh, you are not entitled to the tax rebate of under Section 87A even if you opt for new tax regime, and thus, you will have to pay full tax on your income. So you will have to pay tax at the slab rate on the income beyond Rs 2.5 lakh.

Q

Can I gift Rs 50,000 each to my son-in-law and daughter-in-law in one day? If so, is there any tax liability on the donee or donor?

A

As far as the gifts are given to specified relatives including son-in-law and daughter-in-law, the gifts would not be treated as income for the recipient.

There is not tax liability on the donor as well for gifts made to any person because as under the Indian tax laws, the recipient is required to pay tax on gifts received if the aggregate value of all gifts received during the year exceeds Rs 50,000. However, in respect of gifts made to your daughter-in-law the income earned on the amount gifted to her will attract the clubbing provisions and will be included in your total income under provisions of Section 64 of the Income-tax Act, 1961 till the relationship subsists.

Q

I have taken a loan against gold for the purpose of buying a house. Can I make a claim on the interest paid on this loan too? If so, what kind of evidences shall I have to provide to claim the exemption?

A

You can claim the interest paid on such gold loan under Section 24(b) of the Income-tax Act, 1961 if you are able to establish that the same was used for buying a house.

You will need the bank statement to establish that you had in fact used the gold loan for purchase of your house. Do note that no deductions are available under Section 80C for repayment of the gold loan.

The author is a tax and investment expert

(Disclaimer: Views expressed are the author’s own, and Outlook Money does not necessarily subscribe to them. Outlook Money shall not be responsible for any damage caused to any person/organisation directly or indirectly.)

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