Rebate under Section 87A of Income Tax Act, 1961

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. 5000/- (Rs. 25,00 from A.y 2018-19), 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 (3.5 lakhs wef A.y 2018-19) :-

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 2018-19, and subsequent years. One more question which comes to mind is amount of Rebate Available under section 87A, i.e is it Rs. 2000/- or Rs. 5000/- or Rs. 2,500/- for Financial Year 2018-19? 

Relevant Articles-

We have made a Chart of Amount of Rebate U/s. 87A Available to  individual resident in India whose total income does not exceed five hundred thousand rupees (3.5 lakhs wef A.y 2018-19) :-

REBATE AMOUNT UNDER SECTION 87A OF INCOME TAX ACT, 1961

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 2017 to provide maximum deduction of Rs 2500 if the net income of resident individual does not exceeds Rs 3.5 Lacs.

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. 2018-19/ A.Y 2019-20 , whose total income does not exceed 3.5 Lakh rupees in Financial Year 2017-18 & 2018-19  Further rebate u/s. 87A is also  available for all the years succeeding to A.Y. 2019-20 on compliance of conditions  unless specifically withdrawn.

Key Points

• Rebate under section 87A is available only to Resident individuals and not available to Non Residents.
• Rebate under section 87A available to both Male and Female assesses
• If the total tax payable by is less than Rs.  5000/- (Rs. 2,500/- from F.Y. 2017-18), rebate u/s. 87A is restricted to “total tax payable”.
• Rebate u/s. 87A is allowed before levy of Health and Education 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 u/s. 87A 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 [three hundred fifty 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 [two thousand and five hundred] rupees, whichever is less.

(Compiled by Taxguru Team- Republished with Amendments)

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