Income Tax Rebate: A New Confusion for FY 2024-25

Rebate for New Tax Regime under Section 87A

A maximum rebate of Rs. 25,000 is allowed to individual under section 87A, if the total income of an individual, who is opting for the new tax scheme under Section 115BAC(1A), is chargeable to tax under section 115BAC(1A) and total income does not exceed Rs. 7,00,000.

The Confusion

Now up to FY 23-24, tax under the New Tax regime for Income up to Rs. 700,000 was Rs. 25,000, so this made sense. But as per Finance Act 2024, Tax on Income of Rs. 700,000 is Rs. 20,000. And Tax on Income of Rs. 750000 is Rs. 25,000.

Change in Income Tax slabs in new tax regime

With a change in Tax slab, Tax on income of Rs 7.50 lakh Decreased to Rs. 25000. But amendment in proviso to Section 87A increasing the eligibility up to income of 7.50 lakh for section 87A rebate was missed out in Finance Act 2024.

Therefore, it is requested from Income Tax Department to provide a suitable clarification on this issue in advance, so it does not create chaos on later stages.