Section 87A of Income-tax Act, provide for a rebate of an amount equal to hundred per cent of such income-tax or an amount of Rs. 2000/- (Rs. 5000 from Financial Year 2016-17), whichever is less, from the amount of income-tax to an individual resident in India whose total income does not exceed five hundred thousand rupees.

A question which is coming in the mind of Taxpayers nowadays is do Rebate of income-tax under section 87A as available from FY 2013-14, also available for FY 2015-16 and subsequent years. One more question which comes to mind is amount of Rebate Available, i.e is it Rs. 2000/- or Rs. 5000/- for Financial Year 2015-16?

We have made a Chart of Amount of Rebate Available to  individual resident in India whose total income does not exceed five hundred thousand rupees :-

S. No.Financial YearRebate Available
12016-17 & Subsequent Years unless withdrawn5000/-
22015-162000/-
32014-152000/-
42013-142000/-

Finance Act 2013 has introduced the rebate U/s. 87A and in this section it has not restricted the exemption to any particular Financial or Assessment year and section been further amended by Finance Act 2016 to Increase the benefit from Rs. 2000/- to Rs. 5000/- wef Financial Year 2016-17 .

In both the Act mentioned above Section 87A has not restricted the exemption to any particular Financial or Assessment year.  So in our  our view Rebate U/s. 87A is Available to Resident Individuals for A.Y. 2016-17/ FY 2015-16 , whose total income does not exceed 5 Lakh rupees in Financial Year 2015-16. Further rebate is also  available for all the years succeeding to A.Y. 2016-17 on compliance of conditions  unless specifically withdrawn.

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Key Points

  • Amended Section 87A is  applicable from 1st April, 2014 and will, accordingly, apply in relation to the assessment year 2014-15 and subsequent assessment years.
  • Rebate is available only to Resident individuals and not available to Non Residents.
  • Rebate available to both Male and Female assesses
  • If the total tax payable by is less than Rs. 2000/- (Rs. 5000/- from F.Y. 2016-17), rebate is restricted to “total tax payable”.
  • Rebate is allowed before levy of Education Cess, SHE Cess & Surcharge.
  • Rebate benefit is available to all category of Individuals but not to super senior citizen, since he is already fully exempted up to Rs. 5 lakh.
  • Above amendment does not mean that basic Exemption Limit has been raised.

Extract of Section 87A is as follows :-

Rebate of income-tax in case of certain individuals.

Rebate of income-tax in case of certain individuals.

87A. An assessee, being an individual resident in India, whose total income does not exceed five hundred thousand rupees, shall be entitled to a deduction, from the amount of income-tax (as computed before allowing the deductions under this Chapter) on his total income with which he is chargeable for any assessment year, of an amount equal to hundred per cent of such income-tax or an amount of 1[two] thousand rupees, whichever is less.

1. Word “five” shall be sub. for “two” by Act No. 28 of 2016 (w.e.f. 1-4-2017).

(Compiled by Taxguru Team- Republished with Amendments)

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Category : Income Tax (20858)
Type : Articles (10788) Featured (3626)
Tags : Budget (1129) Budget 2014 (173) CA Sandeep Kanoi (235) SECTION 87A (11)
  • Manjunatha N K

    Is section 87A applicable for financial year 2015-16 AY 2016-17 ????

    • G.V.RAO

      YES,SIR.

  • rahul kapoor

    NO

    You can not get the rebate of sec.87A because that assesse whose gross income is upto 500000 P.A execpt agriculture income . only that person person can get the rebate

  • sherith

    My total salary and other income( FD Interest) comes Rs.5,20,000/- after all deductions 80c, 80d my total income comes Rs.3,00,000/- . My taxable income is Rs.50,000/( Rs.3lakhs- Rs.2.5 lakhs). Can I deducte Rs.2,000/- under section 87 a

    • yugesh

      yes, total tax paid = 5000 and your total income comes < 5L. you can avail the rebate 2000.

      • John

        If the total tax paid = 1000, then is this Rebeat applicable.. In Key points it is mentioned as If the total tax payable by is less than Rs. 2000/-, rebate is restricted to “total tax payable”.

        Does it mean I have to pay tax of Rs.1000 ?

  • Anand

    Hi,
    Under which condition rebate of 2K is given…? is it for below 5 Lac income…?
    suppose I am exceeding 10% slab by not providing document while employer taxation & I submit document while filing & come under 10% slab..in this case is govt will refund amount with rebate…?

  • Surendra Gond

    dear sir/mam
    i am a state govt. employee comes under CPS. if i include CPS contribution of Rs. 39,500/- from employer to my income, my gross income becomes Rs.5,03,833/-. after the deductions under 80 c , 80-D, 80- TTA and 80-CCD(1B) my taxable income becomes 3,25820 may i avail the deduction of Rs.2000/- u/s 87 A. and what amount of tax i have to pay for FY 2015-16.

    • Harish Yadav

      no you cant eligible to deduct Rs.2000/-, because you total income exceeds Rs.5 lakhs

    • Bharat

      yes you can avail deduction u/s 87A as this section use word “Total income” not the word ” Gross total income”.

    • Bhuvneshwari Singhania

      yes you can avail exemption as your totaltaxable income after deduction is less than 500000

  • Soumya Ranjan Lenka

    My total income including arrears Rs.572710. Total income excluding arrears Rs. 460910. I have apportioned my arrears in respective financial year. And got relief under section 89(i) . Am i eligible for tax rebate u/s 87A of Rs. 2000/ as my total income related to this financial year is less than 5 lac.

    • Navneet Sharma

      No you are not eligible for rebate u/s 87a, bcoz such rebate is calculated before giving effect of relief u/s 89, i.e., ceiling limit for 87a includes income + arrears which in your case exceeds ₹5 lacs.

  • John

    Hi,
    I work in a private sector. 25year Male. After all the detection, my total income is 260000. I know there is no tax if the total income is less that 2.5L. So am I applicable to 87C and will I get the Rebeat or I have to pay Rs.1000 as tax.

    Got a confusion after reading the following in the Key points
    If the total tax payable by is less than Rs. 2000/-, rebate is restricted to “total tax payable”.

    If
    the total tax payable by is less than Rs. 2000/-, rebate is restricted
    to “total tax payable”. – See more at:
    http://taxguru.in/income-tax/availability-rebate-87a-fy-201415-ay-201516.html#sthash.lM0iIORH.dpuf

    • Anil

      No u don’t have to pay any tax as ur tax payable is less than rebate

    • CA. Shashank Gupta

      Dear John
      You are eligible for 87A rebate of Rs. 2,000/- since your taxable income is less than Rs. 500,000/-.
      Regards
      CA Shashank Gupta
      shashankcagupta@gmail.com

  • Chennaiguy

    Good Article.. OK.. I understood how 87A is calculated and other stuffs..
    I have a serious question here-

    How does this refund reaches me? Does employer need to add a section in Form 16 and provide me the LESS or Should I have to mention when filing my returns ( and get it as refund)? . So far, in my tax statement, I dont see this deduction even though I am eligible for 87A and as far I remember, I have never seen this section in Form 16 issued by my employer so far..

    TIA..

    • CA. Shashank Gupta

      U need to claim the refund yourself while filing the return.
      And hurry up…
      31st July is approaching.

  • Pusp

    Hello sir,
    I want known that my taxable salary after deduction of chapter VIA is 254770.00
    Now i confuse that TDS will b deductible on 4770 @ 10% or not.
    Rebate 87A 2000/- after TDS or before…..??

    • pradeep

      4700-2000(87a)=2700
      education cess & sec, hig. cess-3%=81
      Total Tax Liability=2700+81=2781

    • Hemant

      254770-250000= 4,770
      4700*10% = 470
      Tax = Rs 470 , Since less than 2000, No tds… (87A 2000 rebate is on tax..and not on taxable income.)

    • CA Sumit

      254770-250000=4770
      tax on 4770 i.e. 4770 *10.3%=491
      as it is less than 2000. No TDS. Whole amount is given as rebate u/s. 87A

  • Rakesh

    Is the same available in case of belated return also?

    • PURUSHOTTAM JHA

      YES.87A REBATE HAS NOTTHING TO DO WITH RETURN TIME LIMIT

  • Ashraf

    I I have gross income 600000 and have GPF contribution for Rs 150000 can I claim rebate under section 87A

    • charan

      Yes u r eligible to claim rebate u/s 87a.
      600000-150000=450000 (net income)
      450000-250000=200000(here 250000 is basic exemption limit)
      tax on 200000*10%=20000-2000(rebate)=18000+e.cess also….

    • Ashok Mittal

      Yes.

  • DURGAPRASAD AGARAWAL

    If after allowing the deductions the taxable salary comes Rs. 700000/ is he is entitled for tax rebate under section 87A

    • ANIL RAJ

      IF HE HAD INCOME LESS THAN 500000 we can deduct 2000 as rebate

  • deepa bhargava

    my income is 550000 with saving under 80C around 200000, how much tax I need to pay. weather 150000 can be deducted under 80C plus 5000 for 87A for fy 2016-17

  • Pankaj Kasana

    Hello, I am a salaried individual. I prepared and submitted my ITR for A.Y. 2016-17 online through my account. After putting in figures for salary and TDS deducted, total tax payable was Rs. 7590. I should have paid the tax first and then submitted the return by putting paid amount as self-assessed tax. However, by mistake, I submitted the return first and then paid the amount (but before e-verifying the return). After tax-payment through Challan 280, I e-verified the tax-return through my net banking. Now, the acknowledgement I have received still shows as ‘Tax Payable’ of Rs. 7590. I want to know if this would be considered as faulty return? If so, the remedy thereof.

    • Sudhakar B

      Just update the amount and Re upload it(Corrected)-No problem

  • Ashok Mittal

    Is 87 A available to HUF?

  • riyaz

    sir can a huf cliam rebate as per IT?

  • riyaz

    SIR AM A HUF CAN I CLIAM REBATE U/S 87A

  • kavin

    professional tax 2190 is deducted in TDS. is it refundable?

  • Yogesh Sharma

    Hello sir. actually there is difference in my 26AS form and FORM 16 on Gross income .. what should i have to rectify or crosscheck can u please explain it..

  • Junaid Ahmed

    Hi,
    i am doing business (partnership) and i filing income tax for my company every year and my business profit is below 5lakh…. for one partner…

    while filling my individual income tax is applicable for rebate

    can be deducted under 80C plus 5000 for 87A for fy 2016-17

    • Aniket Junnare

      Whats the status of your partnership firm ? Is it LLP, Proprietary firm having profit/loss share decided or what ?

      Have you registered PAN Number for your business firm ?

    • Aniket Junnare

      Whats the status of your partnership firm ? Is it LLP, Proprietary firm having profit/loss share decided or what ?

      Have you registered PAN Number for your business firm ?