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December 20, 2022
Tax Rebate Under Section 87A
The Income Tax Act, which was brought into force in 1961, is the statute under which all the tax-related matters are listedIt includes levy, administration, collection as well as recovery of income tax. Rebate under Section 87A provides for lower tax payment from individuals earning below a defined limit.
According to the Income Tax Department, “An individual who is resident in India and whose total income does not exceed Rs. 3,50,000 is entitled to claim rebate under section 87A. Rebate under section 87A is available in the form of a deduction from the tax liability and not income. Rebate under section 87A will be lower of 100% of income-tax liability or Rs. 2,500.
Everything You should know about rebate under section 87A :-
- The amount of deduction that can be claimed under this section is either 100% of the income tax liability or Rs. 2,500 (whichever is lower).
- The rebate is applicable to total tax before adding the educational cess of 4%.
Who is eligible to claim rebate under section 87A
- Only an individual is eligible to claim the rebate. Companies, firms or Hindu Undivided FamiliesFamiliesy are not eligible to claim this rebate.
- Total taxable income of individual should be less than Rs. 350000/- in a financial year.
- Individual should be a resident Indian.
- Individual should not be of age exceeding 80 years.
Example of claiming rebate under section 87A:-
Applicable to FY 2017-18 and FY 2018-19 – Below calculation is applicable for financial year 2017-18 and 2018-19
| TAXABLE INCOME | INCOME TAX | REBATE APPLICABLE UNDER SECTION 87A | TAX PAYABLE |
|---|---|---|---|
| Rs. 3 lakhs | Rs. 2,500 | Rs. 2,500 | Nil |
| Rs. 3.1 lakhs | Rs. 3,000 | Rs. 2,500 | Rs. 500 |
| Rs. 3.2 lakhs | Rs. 3,500 | Rs. 2,500 | Rs. 1,000 |
| Rs. 3.3 lakhs | Rs. 4,000 | Rs. 2,500 | Rs. 1,500 |
| Rs. 3.4 lakhs | Rs. 4,500 | Rs. 2,500 | Rs. 2000 |
| Rs. 3.5 lakhs | Rs. 5,000 | Rs. 2,500 | Rs. 2,500 |
| Rs. 3.6 lakhs | Rs. 5,500 | Nil | Rs. 5,500 |
| Rs. 3.7 lakhs | Rs. 6,000 | Nil | Rs. 6,000 |
| Rs. 3.8 lakhs | Rs. 6,500 | Nil | Rs. 6,500 |
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