Rationalization of rebate allowable under Section 87A

The existing provisions of section 87A provide for a rebate up to Rs. 5000 from the income-tax payable to a resident individual if this total income does not exceed Rs. 5,00,000.

In view of proposed rationalisation of tax rates for individuals in the income slab of Rs. 2,50,000 to Rs.5,00,000,it is proposed to amend Section 87A so as to reduce the maximum amount of rebate available under this section from existing Rs. 5000 to Rs. 2500. It is also proposed to provide that this rebate shall be available to only resident individuals whose total income does not exceed Rs. 3,50,000.

This amendment will take effect from 1st April, 2018 and will, accordingly, apply in relation to the assessment year 2018-19 and subsequent assessment years.

[Clause 38]

Extract of relevant clause from Finance Bill, 2017

Amendment of section 87A.

38. In section 87A of the Income-tax Act, with effect from the 1st day of April, 2018,—

(a) for the words “five hundred thousand rupees”, the words “three hundred fifty thousand rupees” shall be substituted;

(b) for the words “five thousand rupees” [as substituted by section 46 of the Finance Act, 2016], the words “two thousand five hundred rupees” shall be substituted.

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10 responses to “Rebate allowable under Section 87A reduced to Rs. 2500”

  1. sudheer kumar says:

    ya ha

  2. Ashalatha A says:

    Financial year2017-18 income taxrebate
    allowable u/s87A only for those whose total income is less than 3.5laks.here total income means what?is it gross income? Or after under various sections?for eg my gross income is 5laks .After the deduction of 1.5laks ( under various sections) +2.5laks(standard deduction)my taxable income is 1lak.now I am eligible for rebate of2500 u/s87A?

  3. Saurabh Sehgal says:

    What is total income? Is it gross income or gross less expenses and deductions (PPF and tuition fees). Please tell

  4. ashok shinde says:

    Ashok shinde
    Accounts Manager

    My dar s.k.verma

    Plas note : A.Y.2018-19 (Ii.e.fy 17-18)
    This amendment will take effect from 1st April, 2018 and will, accordingly, apply in relation to the assessment year 2018-19 and subsequent assessment years.

  5. S K Verma says:

    This amendment will take effect from 1st April, 2017 and not 1st April, 2018 as stated by oversight

    • G R JOG says:

      YOU ARE CORRECT.
      BUT TAX GURU STILL NOT BOTHERED TO CHANGE IT EVEN AFTER ONE YEAR OF POSTING.

      • TG Team says:

        Dear Sir,

        In Income Tax Law takes effect as per assessment year so amendment takes effect from first day of Assessment Year 2018-19 i.e. 1st April 2018 and will apply for Financial Year 2017-18 and subsequent Financial Years.

    • TG Team says:

      Dear Sir,

      In Income Tax Law takes effect as per assessment year so amendment takes effect from first day of Assessment Year 2018-19 i.e. 1st April 2018 and will apply for Financial Year 2017-18 and subsequent Financial Years.

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