Income Tax Rebate Under Section 87A

Income Tax Rebate under section 87A

Updated on

Budget 2019 Update:

a. Individual taxpayers with annual income up to Rs. 5 lakh rupees to get full tax rebate.The income limit eligible to avail tax rebate under section 87A raised to Rs. 5 lakh from Rs. 3.5 lakh. b. The limit of tax rebate under section 87A increased to Rs. 12,500 from Rs. 2,500. Read here the key highlights of Interim Budget 2019.
As we all know, the primary duty of the government is to safeguard its citizens. While citizens are expected to pay taxes as per their income and the source of their income, the government uses the money to build the nation and its infrastructure. However, there are also many helpful provisions in our tax laws to reduce your tax liability. Section 87A of the Indian Income Tax Act is one such provision. Rebate under section 87A provides for a marginally lower payment of taxes to individuals earning an income below the specified limit. It is provided to reduce the tax burden of the lower income bracket. Budget-2019-middle-class

1. Eligibility to Claim Rebate Under Section 87A FY 2019-20 (AY 2020-21)

You can claim tax rebate under this provision if you meet the following conditions:
  1. You must be a RESIDENT INDIVIDUAL; and
  2. Your Total Income, less Deductions, (under Section 80) is equal to or less than Rs 5 lakhs.
  3. The rebate is limited to Rs 12,500. This means that if the total tax payable is lower than Rs 12,500, then that amount will be the rebate under section 87A. This rebate is applied to the total tax before adding the Education Cess (4%).
Following are a few examples of the 87A rebate allowed to Resident Individuals including Senior Citizens:  
Total Income Tax payable before cess Rebate u/s 87A Tax Payable + 4% Cess
2,70,000 1,000 1,000 0
3,60,000 3,000 3,000 0
4,90,000 12,000 12,000 0
12,00,000 1,72,500 0 1,79,400

2. Eligibility to Claim Rebate Under Section 87A FY 2018-19 (AY 2019-20)

You can claim tax rebate under this provision if you meet the following conditions:
  1. You must be a RESIDENT INDIVIDUAL; and
  2. Your Total Income, less Deductions, (under Section 80) is equal to or less than Rs 3.5 lakhs.
  3. The rebate is limited to Rs 2,500. This means that if the total tax payable is lower than Rs 2,500, then that amount will be the rebate under section 87A. This rebate is applied to the total tax before adding the Education Cess (4%).
Following are a few examples of the 87A rebate allowed to Resident Individuals including Senior Citizens:
Total Income Tax payable before cess Rebate u/s 87A Tax Payable + 4% Cess
2,65,000 750 750 0
2,70,000 1000 1000 0
3,00,000 2,500 2,500 0
3,50,000 5,000 2,500 2,500+100=2600

2. Eligibility to Claim Rebate Under Section 87A FY 2017-18 (AY 2018-19)

You can claim the rebate if you meet the two conditions listed below:
  1. You are a Resident individual; and
  2. Your total income, less deductions, (under Section 80) is equal to or less than Rs 3.5 lakhs.
  3. The rebate is limited to Rs 2,500. This means that if the total tax payable is lower than Rs 2,500, then that amount will be your rebate under section 87A. This rebate is applied to the total tax before adding the Education Cess(3%).
Following are a few examples of the rebate allowed to Resident Individuals including Senior Citizens:  
Total Income Tax payable before cess Rebate u/s 87A Tax Payable + 3% Cess
2,65,000 750 750 0
2,70,000 1000 1000 0
3,00,000 2,500 2,500 0
3,50,000 5,000 2,500 2,500+75= 2,575
 

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4. Frequently Asked Questions

 
  • Can NRIs claim rebate under section 87A?
    No, this rebate is only allowed for Resident Indians. Therefore, taxpayers qualifying as non-residents are not eligible for a rebate under 87A.
  • Can this rebate be claimed by anyone?
    This rebate is only allowed to individuals. HUFs or firms or companies cannot claim this rebate.
  • How can I claim section 87A rebate in ClearTax Software?
    ClearTax e-filing software automatically gives rebate while e-filing, if you are eligible.