According to tax and investment expert Balwant Jain, Section 87A rebate is not available to Hindu Undivided Families (HUFs). The rebate is specifically designed for resident individuals under the Income Tax Act, 1961, and is not applicable to HUFs or other non-individual taxpayers. This restriction applies regardless of whether the HUF is a tax resident or not.
Under the old tax regime, a rebate of ₹12,500 is available against tax liability for income of any nature, except tax on long-term capital gains arising on listed shares and equity-oriented schemes, if the aggregate total income does not exceed ₹5 lakh. In contrast, under the new tax regime, a higher rebate of ₹60,000 is available against tax liability on normal income taxed at slab rates if the income does not exceed ₹12 lakh during the financial year. The rebate cannot be claimed against tax liability in respect of income taxed at special rates, such as short-term and long-term capital gains on listed shares and equity-oriented schemes.
As reported by tax expert Balwant Jain, income tax laws provide that if normal income is lower than the applicable basic exemption limit, the shortfall can be set off against income on which tax is payable at flat rates. This facility is available to both tax-resident individuals and HUFs, allowing adjustment of short-term and long-term capital gains on listed shares and equity-oriented schemes if normal income falls below the basic exemption limit. The amount of basic exemption limit depends on age and chosen tax regime, with different limits for different age groups.
According to the tax expert, the basic exemption limit varies by age and tax regime chosen. Under the new tax regime, the basic exemption limit is ₹4 lakh for all individuals, irrespective of age. For individuals up to 60 years, the limit is ₹2.5 lakh, while those between 60 and 80 years have a limit of ₹3 lakh. Individuals above 80 years can claim up to ₹5 lakh as basic exemption limit. This structure allows taxpayers to set off the shortfall in basic exemption limit against capital gains taxation.
