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Vipul

Vipul Bhavsar  | Answer  |Ask -

Tax Expert - Answered on Apr 29, 2025

Vipul Bhavsar is a chartered accountant from The Institute of Chartered Accountants of India. He has over 16 years of experience in corporate advisory, taxation and financial reporting.
His interest areas are consulting, income tax, GST and due diligence.
He founded his CA firm, V J Bhavsar and Associates, in 2010 through which he offers services like virtual CFO, trademark registrations, company /LLP formation, MIS reporting, audit, tax and TDS compliances, accounts receivable/payable management and payroll processing.... more
Vilas Question by Vilas on Apr 10, 2025
Money

My income projection for 25-26 is as below. Pension + interest = Rs 11 lakh LTCG Equity MF = Rs 2 lakh LTCG Debt MF = Rs 3 lakh Debt MF held since 2020 Will I get S87A rebate ? For the FY 25-26 ?

Ans: Dear Vilas,
Under New Regime, Total Income works out to Rs. 1600000
You get rebate of Rs.50000 under 87A and Tax liability shall be around Rs. 48750.

However, it is strong advised to consult CA, since taxation of Capital Gain involves various factors

Vipul Bhavsar
Chartered Accountant
www.capitalca.in
DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.
Money

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Ramalingam

Ramalingam Kalirajan  | Answer  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Apr 11, 2025

Money
If income consists of salary ( less than Rs 12 lakh) and ltcg on equity and debt mutual funds and exceeds Rs 12 lakh, will 87A rebate allowed by IT ?
Ans: Let us now assess the situation in a very simplified way.

You are earning a salary.
Your salary is less than Rs 12 lakh per year.
You also have long-term capital gains (LTCG).
You have LTCG from equity mutual funds.
You also have LTCG from debt mutual funds.
Your total income, including LTCG, is more than Rs 12 lakh.

So, will you get the Section 87A rebate?

Let us look at the law and assess it properly.

Who Can Claim 87A Rebate?

You must be a resident individual in India.

Your total taxable income must be less than or equal to Rs 7 lakh.

If income crosses Rs 7 lakh, even by Rs 1, rebate will not apply.

The rebate under Section 87A is Rs 25,000 (for FY 2024-25) under the new tax regime.

If you are under the old tax regime, rebate is Rs 12,500 if income is below Rs 5 lakh.

What is Total Taxable Income?

It includes salary, capital gains, interest, rental, etc.

It means your entire income after deductions.

Deductions include 80C, 80D, NPS, home loan interest, etc.

Even capital gains are part of total taxable income.

LTCG on equity funds is tax-free up to Rs 1.25 lakh now.

Anything above Rs 1.25 lakh in LTCG will be taxed at 12.5%.

Debt mutual fund gains are taxed as per your income tax slab.

So, LTCG is included in total income.

Impact of LTCG on Rebate Eligibility

If total income, after all deductions, is above Rs 7 lakh, you are not eligible.

Even if salary is low, LTCG can push income above Rs 7 lakh.

So, 87A rebate is not available if income crosses Rs 7 lakh.

No partial rebate is given if it exceeds by just a small amount.

Simple Summary With Example

Salary: Rs 6.5 lakh

LTCG on equity: Rs 2 lakh

Exempt LTCG: Rs 1.25 lakh

Taxable LTCG: Rs 75,000 (tax at 12.5%)

Total taxable income: Rs 7.25 lakh

Since income > Rs 7 lakh, no rebate under 87A allowed.

You will pay tax on full income as per new tax regime.

Suggestion from Certified Financial Planner

You can use deductions like 80C, 80D, NPS, etc.

These deductions help in bringing total income below Rs 7 lakh.

If total income is reduced to Rs 7 lakh or less, then 87A rebate will apply.

Plan gains carefully to avoid crossing Rs 7 lakh limit.

Spread sale of equity mutual funds across different financial years.

Or use loss harvesting to lower LTCG in the same year.

Key Reminders on Mutual Fund Taxation Rules

For equity mutual funds:

LTCG above Rs 1.25 lakh taxed at 12.5%.

STCG taxed at 20%.

For debt mutual funds:

Both LTCG and STCG taxed as per your income slab.

No indexation benefit anymore.

This increases tax burden significantly for high-income investors.

Disadvantages of Index Funds

Index funds don’t beat the market.

They only match the market returns.

No downside protection during falling markets.

Fund manager has no control over stock selection.

All stocks in index are included even if they perform poorly.

Volatility is high during market corrections.

No active risk management.

They do not suit goal-based long-term investing.

Benefits of Actively Managed Funds

Expert fund managers select high-quality stocks.

They aim to beat market returns.

More research-backed approach.

Better downside risk control.

Flexibility in asset allocation and stock selection.

Good for long-term wealth creation with proper diversification.

Ideal for retirement, children’s education, and wealth building.

Disadvantages of Direct Mutual Funds

No expert guidance is available.

You may choose wrong funds without support.

Portfolio can become unbalanced.

No monitoring or review by experts.

Performance may be inconsistent without strategy.

Direct plans may seem cheaper but can lead to losses.

Why Regular Funds via CFP are Better

Certified Financial Planners guide you on the right fund mix.

You get regular reviews and updates.

Portfolio is aligned to your goals and risk.

You get handholding during market ups and downs.

Helps in staying disciplined and systematic.

Mistakes are avoided through expert review.

Final Insights

Section 87A rebate is simple but strict.

It is based on your total income after deductions.

LTCG on mutual funds is fully considered in total income.

If total income exceeds Rs 7 lakh, rebate is lost.

You must plan gains and deductions wisely.

Reduce LTCG through staggered redemptions.

Use tax-saving options under 80C, 80D, NPS, etc.

Avoid relying on index funds.

Choose active mutual funds with better performance scope.

Avoid direct funds without proper knowledge.

Get help from a Certified Financial Planner.

Your financial journey will be safer and more confident.

Tax saving and goal achievement can go together.

Don’t miss opportunities to plan better.

Tax efficiency and smart fund choices matter every year.

A good planner will help you stay tax-smart and wealth-ready.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

..Read more

Latest Questions
Nayagam P

Nayagam P P  | Answer  |Ask -

Career Counsellor - Answered on May 02, 2025

Asked by Anonymous - May 02, 2025
Career
Can I get NIT Trichy ECE with 98%ile in JEE MAINS 2025 ?? EWS rank 4146
Ans: Providing precise admission chances for each student can be challenging. Some reputed educational websites offer ‘College Predictor’ tools where you can check possible college options based on your percentile, category, and preferences. However, for a more accurate understanding, here’s a simple yet effective 9-step method using JoSAA’s past-year opening and closing ranks. This approach gives you a fair estimate (though not 100% exact) of your admission chances based on the previous year’s data.

Here is, How to Predict Your Chances of Admission into NIT or IIIT or GFTI After JEE Main Results – A Step-by-Step Guide.

Step-by-Step Guide to Check Your Admission Chances Using JoSAA Data
Step 1: Collect Your Key Details
Before starting, note down the following details:

Your JEE Main percentile
Your category (General-Open, SC, ST, OBC-NCL, EWS, PwD categories)
Preferred institute types (NIT, IIIT, GFTI)
Preferred locations (or if you're open to any location in India)
List of at least 3 preferred academic programs (branches) as backups (instead of relying on just one option)
Step 2: Access JoSAA’s Official Opening & Closing Ranks
Go to Google and type: JoSAA Opening & Closing Ranks 2024
Click on the first search result (official JoSAA website).
You will land directly on JoSAA’s portal, where you can enter your details to check past-year cutoffs.
Step 3: Select the Round Number
JoSAA conducts five rounds of counseling.
For a safer estimate, choose Round 4, as most admissions are settled by this round.
Step 4: Choose the Institute Type
Select NIT, IIIT, or GFTI, depending on your preference.
If you are open to all types of institutes, check them one by one instead of selecting all at once.
Step 5: Select the Institute Name (Based on Location)
It is recommended to check institutes one by one, based on your preferred locations.
Avoid selecting ‘ALL’ at once, as it may create confusion.
Step 6: Select Your Preferred Academic Program (Branch)
Enter the branches you are interested in, one at a time, in your preferred order.
Step 7: Submit and Analyze Results
After selecting the relevant details, click the ‘SUBMIT’ button.
The system will display Opening & Closing Ranks of the selected institute and branch for different categories both Home State (HS) i.e. State you belong to & also Other State (OS).
Step 8: Note Down the Opening & Closing Ranks
Maintain a notebook or diary to record the Opening & Closing Ranks for each institute and branch you are interested in, separately for HS & OS Categories for a quick reference.
This will serve as a quick reference during JoSAA counseling.
Step 9: Adjust Your Expectations on a Safer Side
Since Opening & Closing Ranks fluctuate slightly each year, always adjust the numbers for safety.
Example Calculation:
If the Opening & Closing Ranks for NIT Delhi | Mechanical Engineering | OPEN Category show 8622 & 26186 (for Home State), consider adjusting them to 8300 & 23000 (on a safer side).
If the Female Category rank is 34334 & 36212, adjust it to 31000 & 33000.

Follow this approach for Other State candidates and different categories.
Pro Tip: Adjust your expected rank slightly lower than the previous year's cutoffs for realistic expectations during JoSAA counseling.

Can This Method Be Used for JEE April & JEE Advanced?
Yes! You can repeat the same steps after your April JEE Main results to refine your admission possibilities.
You can also follow a similar process for JEE Advanced cutoffs when applying for IITs.

Want to Learn More About JoSAA Counseling?
If you want detailed insights on JoSAA counseling, engineering entrance exams, preparation strategies, and engineering career options, check out EduJob360’s 180+ YouTube videos on this topic!

Hope this guide helps! All the best for your admissions!

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DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Investment in securities market are subject to market risks. Read all the related document carefully before investing. The securities quoted are for illustration only and are not recommendatory. Users are advised to pursue the information provided by the rediffGURU only as a source of information and as a point of reference and to rely on their own judgement when making a decision. RediffGURUS is an intermediary as per India's Information Technology Act.

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