#Budget 2016- Rationalization of limit of rebate in income-tax allowable under Section 87A

The existing provisions of 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 two thousand rupees, 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.

With the objective to provide relief to resident individuals in the lower income slab, it is proposed to amend section 87A so as to increase the maximum amount of rebate available under this provision from existing Rs.2,000 to Rs.5,000.

This amendment will take effect from 1st April, 2017 and will accordingly apply in relation to assessment year 2017-18 and subsequent assessment years.

Clause 45 To Finance Bill 2016

Clause 45 of the Bill seeks to amend section 87A of the Income-tax Act relating to rebate of income-tax in case of certain individuals.

The aforesaid section provides that an individual resident, whose total income does not exceed five hundred thousand rupees, is eligible for rebate in income-tax equal to hundred per cent. of such income-tax or two thousand rupees, whichever is less.

It is proposed to increase the amount of rebate allowable under the said section from the existing two thousand rupees to five thousand rupees.

This amendment will take effect from 1st April, 2017 and will, accordingly, apply in relation to assessment year 2017-2018 and subsequent years.

Amendment of section 87A.

In section 87A of the Income-tax Act, for the words “two thousand rupees”, the words “five thousand rupees” shall be substituted with effect from the 1st day of April, 2017.

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  • CA. Subhash Chandra Podder

    Don’t spend put in savings bank account .Get Rebate Rs 5000/ per year.

  • Kaushik

    “income does not exceed five hundred thousand rupees,”- Does this 5 Lakh refer to Gross income or does it refer to TAXABLE INCOME after subtracting the tax deductions (80CC) ?

    • kannu rathore

      It refer to Taxable income, your taxable income will be not more then 500000 after all dedution u/s 80C to 80u. If your taxable income is 500000 then you can get benefit of 5000 rebate as per sec 87A.

  • ravi

    My total income is 649999 rs for 2016/17 and my saving is 150000 rs .
    Should i will get benefit of 87 a ie exemption of 5000 rs on tax

    • SONU SAGAR

      yes mr ravi you are eligible to get benifit of rs 5000 in the 80c
      for further clerification call-9711251211(SONU SAGAR)

  • ravi

    My total income is 649990 rs and my saving is 1.5lakh
    Shall i will get benefit of sec 87a for exemption 2000 rs

    • TunaFish

      AFAIK section 87A applies on Net Taxable Income. So you should definitely get the rebate.

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