CA Neil Ganatra

Rebate under section 87A

Section 87A of the Income Tax Act, 1961 was introduced in Finance Act, 2013 to give benefit to a large number of people whose net total income is less than Rs. 5,00,000/-. The rebate under this section is available to resident individuals from A.Y. 2014-15. The rebate available is maximum of 1) 100% of tax payable on total income or 2) Rs. 2,000/-.

As per section 192 (2A), while calculating the taxable salaries, employer should consider the relief under section 89(1) if at all it is available to the employees subject to Rule 21AA and furnishing of Form 10E. However, at the time of introducing rebate under section 87A or even later, provisions of section 192 are not amended in this respect to cover this rebate. Meaning there by is looking to the current provisions of Section 192, employers can not consider rebate u/s 87A and have to make TDS from the salaries of the employees without giving effect of such rebate benefit. The employees will have to ask for refund of such excess amount of TDS by taking benefit of rebate while filing the return of income.

It is noticed most of the accounting and return filing softwares have made amendments in their programming to give benefit of this rebate while calculating TDS from Salaries. This may result in short deduction of tax at source to the extent of rebate calculated. The provision of section 192 has to be amended to include rebate u/s 87A while calculating taxable salary to avoid unnecessary litigations.

As most of the employers all over country would have considered this rebate as mentioned above by default (due to TDS calculation of softwares), it may happen that CBDT amends the provisions with retrospective effect or issue instructions internally to avoid litigations on this base.

(Author may be reached at ganatraneil@gmail.com)

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14 responses to “Rebate under section 87A of the Income Tax Act, 1961”

  1. S M Ratnaparkhi says:

    my taxable income for the financial year is
    above Rs. five lakh and less than Rs.10.00 lakh.

    Whether I am eligible for I. T Benefit under Sec.87 A of Income Tax act.

  2. Amitesh Kesharwani says:

    Dear sir,
    I think 87A says, Least of the two
    ) 100% of tax payable on total income or
    2) Rs. 2,000
    Technically, if it’ll be maximum of two then whole amount of tax will be exempted, so dept. never make this as maximum.

    Thanks & Regards
    Amitesh Kesharwani
    amiteshkrshaw@gmail.com

  3. Satheesh Rajendrababu says:

    Dear sir
    I am Satheesh , I have TI of R’s 412427/-
    I want to know, for getting rebate under section 87A we are taking the least amount from among the 3condition, one of the condition is that’s we need to find out the rent paid in excess of 10% of the total income.
    Suppose the rent is actually less than 10% of the total income (ie no excess amount over 10%) which amount will be taken for the rebate calculation.
    Please reply

  4. kashi khandelwal says:

    my question is this sectipn will give deduction to very super senior citizen. if in question it is mention very super senior citizen.

    Thanking you

  5. vikramsinh says:

    My net taxable income is 327560 for FY 2014-15 but I got arrears 202800 of previous years of 2009-10 to 2013-14, so after getting arrears my net income become530360 and my relife under 89(1) is 3309 then I clim for rebet 2000 under 87A

  6. SG Narasimha Murthy says:

    I am a retired central government employee. I want a simple solution for Section 87A deduction. For example if my taxable income is Rs.50,000 Is it sufficient to save Rs.30,000 Please publish a worked out example where a gross income does not exceed Rs.5,00,000 and claiming a deduction of Rs.2000 out of tax payable for the a.y.

  7. P.K MISHRA says:

    hi..
    I am a central govt. employee having income from salary more than 5 lakhs, could not have filed the ITR of previous year i.e AY- 2013-14.
    while e-filing of ITR5 for Ay-2013-14 what should be filled in column asking date of formation & return filed under section of I.tax??
    Is form ITR5 is appropriate for me?

  8. KULDIP SINGH BHAKNA says:

    pl. detail of 8o-L & 87-A income tax rebate fy 2014-15 & ay 2015-16

    kuldip singh bhakna 091-98152-68496-m

  9. CA. AKSHAY CHOUGULE says:

    Dear Neil…

    In first para only you have made severe mistake..
    Sec. 87A says which ever is less.
    You have mentioned maximum of..

    Do careful next time…

    Warm Professional Wishes…

  10. SEKARAN says:

    I DO NOT UNDERSTAND REASONS FOR THE COMPLICATED EXPLANATION REG THE RS 2000 DEDUCTION FOR NET TOTAL INCOME OF RS 5 LAKHS E.G. 1. 100% OR 2. RS 2000.
    mAY BE THE CBDT WANTS TO BE OVERLY CLEAR THUS PLANTING MORE UNNECESSARY CONFUSION.

  11. Karan Thawrani says:

    100% of tax payable on total income. could you explain this sentence to me with a suitable example?

  12. CA Neil Ganatra says:

    Dear Vikas,

    Out of total 9 circulars of CBDT in the year 2014, there is only one circular (no.3) which speaks about 87A and in that also it only speaks about rebate will available to the assessee. In that circular, section 192 is not touched.

    If you can please give me the reference of circular you are talking about, it wil be very helpful.

    Thank you.

  13. Mrutyunjaya Mishra says:

    Agreed on your view about section-192. But it has been clearly mentioned in the Dept. circular no-8/2013 that Rebate as per Section 87A upto Rs 2000/- to eligible persons may be given while calculating the income tax to be deducted at source from salary income u/s-192.

  14. Vikas says:

    CBDT circular on salaries have said that relief has to be considered.

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