u/percyFI

Since we are in the middle of tax season , have been reading up about the regimes , slabs and various scenarios .
Wanted to get the opinion of the forum on one of them .

The Scenario -

1. Normal Income ( Interest ) - 9 Lakh
2. Debt STCG - 2.50 Lakh .
3. Debt LTCG ( Section 112 ) - 2 Lakh

( the LTCG is Debt MF's bought before April 2023 and held for more than 24 months .Hence per 112 taxed at 12.5% without indexation .

Total Gross Income - 13.50 Lakh .

The Query -

In this case , is the 87A rebate applicable on the non Special Rate income ( i.e 1+ 2 ) ?

I checked in multiple resources and multiple versions of AI & getting the below 2 possibilities .

Possibility 1 -

• Section 112 is special Rate Income and hence excluded from the threshold calculation .
• With that exclusion, the Normal slab income is 11.5L ( <12 Lakh ) & hence 87A Rebate applies on this part .
• Section 112 income will need to be paid as per the special rate of 12.5% .( Infact even if Gross Total income would have been under 12L , tax would still need to be paid on this part ) .

Possibility 2 -

• Gatekeeper Rule checks if your combined taxable income is greater than 12 L .
• Since it is greater in this case , no 87A rebate applies .
• Tax will need to be paid on 11.50 Lakh at slab rate and 2 Lakhs on Special Rate .

 

P.S - I am not a CA or a tax expert . Just a retired guy with too much free time on his hands 😄
hence Looking forward to the clarifications from the experts .

Thanks .