prpri Rebate allowable under Section 87A of Income Tax Act Rebate allowable under Section 87A of Income Tax Act

Tax Rebate is that special word which brings smile on the face of the tax payers! But unfortunately, many people got confused while claiming tax rebate correctly while filing Tax return. This is mainly because this section has been amended many time and hence create confusion in the mind of the taxpayers. Hence today I choose this topic as now return filing season has already been started, so little clarity on this topic will definitely be helpful for all the taxpayers.

Applicability for Claiming Rebate u/s 87A:

1. Assessee must be a Resident Individual

Note: Please note that Non Resident are not eligible for tax rebate and this rebate is only available to Individual assesses only.

2. His Total Income after Deductions (under Chapter VIA) doesn’t exceed Rs 5 lakhs.

3. The rebate is limited to Rs 12,500. This means that if the total tax payable is lower than prescribed limit, then that amount will be the rebate under section 87A.

4. This rebate is applied to the total tax before adding the Education Cess (4%)

Tax Rebate

Example for better understanding

 Particulars Mr. X Mr. Y
Total Income 7,00,000 7,00,000
Deductions 2,01,000 1,96,000
Net Income 4,99,000 5,04,000
Tax 12,450 13,300
Rebate u/s 87A 12,450 NIL
Tax payable NIL 13,300
Cess@4% NIL 532
Total Tax payable NIL 13,832

Note: the tax is calculated based on old slab rate.

Extract of Section 87A of Income Tax Act, 1961

“An assessee being an individual resident in India, whose total Income does not exceed Rupees Five Lakhs, 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. Twelve thousand five hundred, whichever is less.”

I hope the above article will help you at the time of filing your tax return.

Disclaimer: The contents of this article are for information purposes only and does not constitute advice or a legal opinion and are personal views of the author. It is based upon relevant law and/or facts available at that point of time and prepared with due accuracy & reliability. Readers are requested to check and refer to relevant provisions of statute, latest judicial pronouncements, circulars, clarifications etc before acting on the basis of the above write up.  The possibility of other views on the subject matter cannot be ruled out. By the use of the said information, you agree that Author / TaxGuru is not responsible or liable in any manner for the authenticity, accuracy, completeness, errors or any kind of omissions in this piece of information for any action taken thereof. This is not any kind of advertisement or solicitation of work by a professional.

(Republished with Amendments by Team Taxguru)

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  1. S Govindaswamy says:

    If the taxable income is less than Rs 5 lakhs after deductions under sec 80 no tax is payable. Does it not make tax exemption limit of Rs 3 lakhs given to senior citizens meaningless.

  2. SAKTHIKUMAR says:

    My uncle has got an income of 3.67 Lakhs and he is a Sr.citizen. After 3 lakhs exemption + 40,000 Standard deduction tax on balance 27,000 is 1350 + 4% cess ₹54 = ₹.1404. Rebate u/s 87A is ₹1,404 and he need not pay tax. Am I correct?

  3. Indubala says:

    I had filed both salaried and business e-return but 87A rebates comes only on salary return not in business return, please help, why 87A rebate of 2500 not considered in business e-return…

  4. Ashalatha A says:

    Financial year2017-18 income taxrebate
    allowable u/s87A only for those whose total income is less than 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 I am eligible for rebate of2500 u/s87A?

  5. 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.

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July 2021