Income tax

Tax Rebate under section 87A – All you should know

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

 

Ishita Ramani

Ishita Ramani is a young woman entrepreneur and currently the Operations Director at Ebizfiling India Private Limited. In her entire career so far, she has led a team of 50+ professionals like CA, CS, MBAs and retired bankers. Apart from her individual experience on almost every facet of Indian Statutory Compliances, she has been instrumental in setting up operations at Ebizfiling.com! Read about her journey at- https://www.greatcompanies.in/post/ishita-ramani-operation-director-at-ebizfiling-india-pvt-ltd

Leave a Comment

Recent Posts

Compliance Calendar for November 2025

Compliance Calendar November 2025  Introduction As November 2025 begins, every business, professional, and taxpayer must stay updated with important statutory…

6 days ago

CA vs CS Certificates in India – Types, Fees, and Compliance Explained

CA vs CS Certificates in India – Types, Fees, and Compliance Explained   Introduction   Certificates issued by Chartered Accountants (CAs) and…

2 weeks ago

CS Certificates in India – Types, Information Required, Fees & UDIN Norms

CS Certificates in India – Types, Information Required, Fees & UDIN Norms   Introduction   In India, Company Secretary (CS) certificates are…

2 weeks ago

Certificates in India – Types, Information Required, Charges & UDIN Norms

Certificates in India – Types, Information Required, Charges & UDIN Norms   Introduction   For many financial and compliance matters in India,…

2 weeks ago

7 Essential Skills CAs Should Learn in 2025 for Growth

7 Essential Skills CAs Should Learn in 2025 for Growth As a content writer at Ebizfiling, I interact with Chartered…

2 weeks ago

Expecting a Tax Refund but Got a Demand? Understand Your 143(1) Notice

Expecting a Tax Refund but Got a Demand? Understand Your 143(1) Notice   Introduction If you were expecting a refund after…

2 weeks ago