# Income Tax Rebate U/s. 87A For A.Y. 2017-18 (F.Y.2016-17)

Durgesh Vashisth

Rebate of up to Rs. 5,000 for resident individuals having total income of up to Rs. 5,00,000 as per Sec-87A of Income Tax Act, 1961 for A.Y. 2017-18 i.e. F.Y. 2016-17.

The rebate shall be equal to the amount of income tax payable on the total income for assessment year 2017-18 or an amount of Rs. 5,000, whichever is less.

Key Point :-

• Individual resident of India,
• Whose Total Income is up to Rs. 5,00,000,
• Shall be allowed a rebate, From Income Tax,
• 100% of Income Tax or Rs.5,000, Whichever is Less.

The above points have been represented below showing the manner of Computation:-

Example 1

Compute the tax liability of X Ltd., a domestic company, assuming that the total income of X Ltd. Is Rs. 2,80,000.

 Particulars Rs. Tax on total income@30% of Rs.2,80,000 84,000 Less: Rebate under section 87A* ( – ) 84,000 Add: Education cess@2% 1,640 Secondary and higher education cess@1% 840 Total tax liability 86,480

*As per section 87A the rebate of Rs. 5,000 is allowed to residential individual.

Example 2

Compute the tax liability of Mr. X, a salaried employee (age: 45 years), assuming that the total income of Rs. 4,80,000. During the previous year ending on March 31, 2017.

 Particulars Rs. Tax on total income@10% of Rs.2,30,000(Rs.4,80,000-2,50,000) 23,000 Less: Rebate under section 87A (5,000) 18,000 Add: Education cess@2% 360 Secondary and higher education cess@1% 180 Total tax liability 18,540

*As per section 87A the rebate shall be equal to the amount of income tax payable or an amount of Rs. 5,000, whichever is less.

Example 3

Compute the tax liability of Mr. X, a salaried employee (age: 45 years), assuming that the total income of Rs. 2,60,000. During the previous year ending on March 31, 2017.

 Particulars Rs. Tax on total income@10% of Rs.10,000 1,000 Less: Rebate under section 87A (1,000) Add: Education cess@2% Nil Secondary and higher education cess@1% Nil Total tax liability Nil

*As per section 87A the rebate shall be equal to the amount of income tax payable or an amount of Rs. 5,000, whichever is less.

1. 10000*10% = 1000
2. 5000

Rebate allowed of Rs.1000.

Example 4

Compute the tax liability of Mr. X (age: 45 years), assuming that the total income of Rs. 5,40,000. During the previous year ending on March 31, 2017.

 Particulars Rs. Tax on total income@10% of Rs.2,90,000 29,000 Less: Rebate under section 87A (- ) 29,000 Add: Education cess@2% 580 Secondary and higher education cess@1% 290 Total tax liability 29,870

No Rebate U/s. 87A is allowed as Total Income Exceeds Rs. 5,00,000/-

*As per section 87A the rebate shall be equal to the amount of income tax payable or an amount of Rs. 5,000, whichever is less.

Example 5

Compute the tax liability of Mr. X, a salaried employee (age: 45 years), assuming that his casual income of Rs. 4,80,000. During the previous year ending on March 31, 2017.

 Particulars Rs. Tax on total income@30% of Rs.4,80,000 1,44,000 Less: Rebate under section 87A (5,000) 1,39,000 Add: Education cess@2% 2,780 Secondary and higher education cess@1% 1,390 Total tax liability 1,43,170

*As per section 87A the rebate shall be equal to the amount of income tax payable or an amount of Rs. 5,000, whichever is less.

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Category : Income Tax (20867)
Type : Articles (10811)
Tags : SECTION 87A (11) tax deductions (405)

example 4 seems to be incorrect, there should be rebate of 5K, there as well.

• Durgesh Vashisth

As per Section 87A of Income Tax Act, 1961, Rebate of up to Rs. 5,000 is for resident individuals having total income of up to Rs. 5,00,000/-.

In example 4 the Total Income of Mr. X is exceeding Rs.5,00,000/-, there for he is not eligible for rebate u/s 87A.

Thanks & Regards
Durgesh Vashisth
9899812287

• CS T KOTAYYA

Very useful infn indeed in a crystal clear manner even for a lay man .congts.to taxguru and google