Tax Relief: Finance Ministry Highlights Raised Income Tax Rebate to Rs 7 Lakh

Tax rebate in India: The Ministry of Finance announced a revision in Section 87A of the Income-tax Act, 1961. This section now ffers a tax rebate to individuals with an income up to Rs 7 lakh, effectively raising the previous limit of Rs 5 lakh.
tax rebate us section 87

The Ministry of Finance announced an amendment to Section 87A of the Income Tax Act, 1961 (Pic: Canva Pro)

Tax rebate in India: The Ministry of Finance announced a key amendment to the personal income tax regime, as outlined in the Finance Act, 2023. The announcement, made via a social media post, highlights how the Finance Ministry fulfilled a significant promise from the fiscal year's budget. The revision in Section 87A of the Income-tax Act, 1961, now offers a tax rebate to individuals with an income up to Rs 7 lakh, effectively raising the previous limit of Rs 5 lakh, ANI reported.
A tax rebate is a refund or reduction in the amount of tax that an individual or entity owes to the government. Rebates can be used to stimulate economic activity, encourage investments in specific sectors, or provide relief to certain groups of taxpayers. Unlike tax deductions which reduce taxable income, a rebate directly reduces the tax liability, often resulting in a refund to the taxpayer.
This policy change, which is a part of the efforts to ease the tax burden on middle-income earners, was implemented by the Central Board of Direct Taxes (CBDT). The amendment is significant for the new tax regime, where individuals earning up to Rs. 7 lakh are now exempt from paying income tax. This shift is anticipated to benefit a wider range of taxpayers, potentially leading to increased disposable income and thereby stimulating economic growth.
The increased rebate limit under the new tax regime is a strategic step towards tax relief for a larger section of the population, ANI reported.
The Ministry of Finance's announcement has been well-received, as it aligns with the government's broader goals of economic reform. By increasing the tax rebate limit, the government is taking a proactive approach to support the middle-income group, which forms a significant part of the country's economic backbone. This policy is expected to have a positive impact on individual finances.
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