As we all are aware that, there is an amendment under section 87A i.e Rebate of Income Tax which is meant for Assessee being an individual resident in India could help small tax payers to cut out on Taxes marginally. This article covers the rebate applicability, its limit for AY 2019-20 and AY 2020-21 alongwith examples.
Page Contents
1. Extract of Section 87A of Income Tax Act, 1961
“An assessee being an individual resident in India, whose total Income does not exceed Rupees Three Lakhs Fifty Thousand (Refer Note 1), shall be entitled to a deduction, from the amount of income tax (as computed before allowing 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 Rs. Two thousand five hundred (Refer Note 2), whichever is less.”
Note 1: For AY 2020-21, the words “five lakhs” shall be substituted for “three lakhs fifty thousand”
Note 2: For AY 2020-21, the words “twelve thousand and five hundred” shall be substituted for “two thousand and five hundred”
2. Certain basic conditions for availing rebate U/s 87A:
a) Assessee must be a Resident Individual; and
b) His Total Income after Deductions (under Chapter VIA) doesn’t exceed Rs 3.5 lakh for AY 2019-20 and Rs 5 lakhs for AY 2020-21.
c) The rebate is limited to Rs 2500 or Rs 12,500 for AY 2019-20 and AY 2020-21 respectively. This means that if the total tax payable is lower than prescribed limit, then that amount will be the rebate under section 87A. This rebate is applied to the total tax before adding the Education Cess (4%).
3. Some Examples for Better Understanding:
F.Y. 2018 – 2019 (A.Y. 2019 – 2020)
| Total Income | Tax payable before cess | Rebate u/s 87A | Tax Payable + 4% Cess |
| 2,75,000 | 1250 | 1250 | 0 |
| 3,00,000 | 2,500 | 2,500 | 0 |
| 3,50,000 | 5,000 | 2,500 | 2,500+100 = 2,600 |
F.Y. 2019 – 2020 (A.Y. 2020 – 2021)
| Total Income | Tax payable before cess | Rebate u/s 87A | Tax Payable + 4% Cess |
| 2,75,000 | 1250 | 1250 | 0 |
| 3,00,000 | 2,500 | 2,500 | 0 |
| 4,90,000 | 12,000 | 12,000 | 0 |
| 10,00,000 | 1,12,500 | 0 | 1,12,500 +4,500 = 1,17,000 |
(Republished with Amendment)
Author Bio
87A is not applicable to person other than Individual. i.e HUF can not avail benefit of 87A
In my opinion maximum amount of Rebate u/s 87A for F.Y. 2019-20 (A.Y. 2020-21) is Rs.12,500/-, if the taxable income is Rs.5.00 Lacs. of the assessee.
PPFa/c
Nagarnigamseva
Parishad
Whether the stcg on equity-linked mf and ltcg on sale of equity shares below Rs 1 lac on which stt paid be included in total in ome/ taxable income to determine Rs.5 lac limit for rebate u/s 87A?
If taxable income is Rs.500100/-, then Income tax payable is Rs.12520/-(12500+20) + cess 4% as the individual will not be eligible for 87 A rebate. Is this correct? If yes, by earning Rs.100/- his net pay is reduced by Rs.12520/-. The Marginal Relief clause applicable for surcharge is not considered for this case?
how much tax is payable for income rs 5 lakh and five thousand
how much tds is exempted for not filing 15 G/H
Hello Navya,
It means the same refer the bare act for clarification.
I guess my post has been edited accordingly.
Thank You.
You have mentioned (An assessee being an individual resident in India, whose total Income does not exceed [three hundred and fifty thousand rupees],)
It should be Three Lakhs and fifty thousand
You have mentioned( An assessee being an individual resident in India, whose total Income does not exceed [three hundred and fifty thousand rupees])
It should be three lakhs and fifty thousand rupees