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Tax Rebate Under Section 87A

Income Tax Rebate under section 87A

Updated on


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 source of income, government uses the money to build the nation and its infrastructure. However, there are also many helpful provisions in our tax laws to reduce tax liability. 87A of the Indian Income Tax Act is one such example. Rebate under section 87A provides for a marginally lower payment of tax to individuals earning income below the specified limit. It is being provided to reduce the tax burden of lower income bracket.In FY 2018-19 and 2017-18, an individual can claim a maximum rebate of Rs. 2,500 each year.

  1. Eligibility to Claim Rebate u/s 87A FY 2018-19 (AY 2019-20)
  2. Eligibility to Claim Rebate u/s 87A FY 2017-18 (AY 2018-19)
  3. Eligibility to Claim Rebate u/s 87A FY 2016-17 (AY 2017-18)
  4. Frequently Asked Questions

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

 You can claim the rebate if you meet the following conditions:
  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 the rebate under section 87A. This rebate is applied to total tax before adding Education Cess (4%).
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 + 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
 

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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 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 the rebate under section 87A. This rebate is applied to total tax before adding 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
 

Easy and Accurate ITR Filing on ClearTax

File in 7 Mins | Minimal Data Entry | 100% Paperless

 
 
 

3. Eligibility to Claim Rebate u/s 87A FY 2016-17 (AY 2017-18)

You can claim the rebate if you meet both the following conditions:
  1. You are a RESIDENT INDIVIDUAL.
  2. Your Total Income after deductions (under Section 80) is equal to or less than Rs 5 lakhs.
  3. The rebate is limited to Rs 5,000. This means that if the total tax payable is lower than Rs 5,000, then that amount of tax will be the rebate under section 87A. This rebate is applied to total tax before adding Education Cess (3%).
Given below 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 1,500 1,500 0
2,70,000 2,000 2,000 0
4,50,000 20,000 5,000 15,000 + 450= 15,450
5,00,000 25,000 5,000 20,000 + 600= 20,600
 

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 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.