ITR Filing 2025: The season of filing income tax return (ITR) is in full swing. However, this time taxpayers are facing many complications related to form, rules and deductions. The most confused is being seen for the exemption under Section 87A (Section 87A) of the Income Tax Act.
Where is the disturbance?
The government has increased the exemption under section 87A to ₹ 60,000 in the budget 2025. However, this rule will be applicable from FY 2025-26 (Income 2026-27). Despite this, many taxpayers are confused about this discount claim in the current return (AY 2025-26).
What is section 87A?
This provision gives tax exemption when the taxable income is less than a certain limit of taxpayers. This exemption is given after the total calculation of tax, that is, it is reduced from your tax amount.
This means that if you have chosen a new tax system and your taxable income is ₹ 7 lakh or less, then you can get a discount of up to ₹ 25,000. This can make your entire tax zero. At the same time, this discount in the old system is available only up to ₹ 5 lakh income and the maximum limit is ₹ 12,500.
What does the new announcement of Budget 2025 say?
The Finance Minister announced in the budget 2025 that the financial year 2025-26 (assessment year 2026-27) will get a discount of up to ₹ 60,000 on taxable income of up to ₹ 12 lakh in the new tax system. With this, adding standard deduction of up to ₹ 75,000 can be zero to the tax liability by an annual salary of ₹ 12.75 lakh.
With which rule is ITR filing being done right now?
The ITR file that is currently being filed is for FY 2024-25 (Ay 2025-26). The old discount structure is applicable in this. This means that there will be a discount on income of up to ₹ 7 lakh in the new tax system and up to ₹ 5 lakh in the old.
It is also important to take care of these things
Rebate under section 87A is a big relief for middle class taxpayers. However, it is important to note that the new exemption announced in Budget 2025 will be applicable from FY 2025-26 and not in the current ITR filing. Therefore, the correct understanding of the rules is necessary while paying tax, otherwise there may be misunderstanding about refund or tax liability.