New Delhi: The Central Board of Direct Taxes (CBDT)recently revised the rules applicable in the filing of Form 15 H. The new rule will take into account the provision of section 87A and allows even those taxpayers who are eligible for tax rebate under Section 87A of the Income Tax Act. It may be noted that 15H is applicable to persons aged above 60 years
As per the CBDT notification, the Form 15H declaration will now cover the Section 87A rebate. The new income tax rule states that the declaration in Form 15H can be accepted from an individual whose income is higher than the basic exemption limit (Rs 3 lakh) but is eligible for Section 87A rebate where tax liability will be nil after taking Section 87A in account.
The notification states, “In the Income-tax Rules, 1962, in Appendix II, in Form No. 15H in Part II, in note 10, the following provisions shall be inserted, namely- Provided that such person shall accept the declaration in a case where income of the assessee, who is eligible for rebate of income-tax under section 87A, is higher than the income for which declaration can be accepted as per this note, but his tax liability shall be nil after taking into account the rebate available to him under the said section 87A.”
A senior citizen is granted a higher tax exemption limit compared to non-senior citizens. The exemption limit for the financial year 2019-20 for resident senior citizen is Rs 3 lakh compared to Rs 2.5 lakh for non-senior citizens. This modification will benefit those senior citizens whose tax liability will be nil after allowing rebate under Section 87A.
Senior citizens whose interest income is the only source of income will benefit from this change. If they are able to limit their taxable income below Rs 5 lakh, they will have to pay no income tax and will be eligible to file Form 15H. The change will stop those senior citizens from running around for tax refund who have become eligible for submission of Form 15 H.
For those who are not aware, Form 15 H is a declaration under section 197A(1C) of the Income Tax Act, to be made by an individual who is of the age of sixty years or above claiming certain incomes without deduction of tax. This form needs to be submitted to any institution like a bank which deducts TDS if the interest income is above Rs 50,000 a year.
According to Section 87A, “An assessee, being an individual resident in India, whose total income does not exceed Rs 5 lakh, shall be entitled to a deduction, from the amount of income-tax (as computed before allowing the deductions) on his total income with which he is chargeable for any assessment year, of an amount equal to hundred per cent of such income-tax or an amount of Rs 12,500, whichever is less.”
Worth mentioning here is that the benefit of Section 87 A is available to assessees who are resident individuals with a total income below Rs 5 lakh after deductions. The maximum rebate allowed will be Rs 12,500.