Income Tax Rebate under section 87A of the Income-Tax Act, 1961

Section 87A of the Income Tax Act, 1961 provides that an assessee, being an individual resident in India, whose total income does not exceed five hundred thousand rupees, shall be entitled to a deduction, from the amount of income-tax (as computed before allowing the deductions under Chapter VIII) 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 “twelve thousand and five hundred rupees, whichever is less.

Eligible assessee

An individual who is resident in India (not to Non-Resident Individuals), and whose total income does not exceed Rs. 5,00,000 is entitled to claim rebate under section 87A.

Essential conditions

(i)     This rebate is available from the assessment year 2014-15.

(ii)    Section 87A is applicable on Total Income and not on Gross Income.

(iii)   This rebate is allowed before the levy of Health and Education Cess.

(iv)   This rebate is not available to Super Senior Citizen i.e. individuals who has attained the age of 80 years because their income upto Rs. 5,00,000/- is exempt from income-tax and this section does not apply on above Rs. 5,00,000/-.

(v)    Negative income from house property (like interest on house loan for self-occupied property) is also to be reduced/considered to get total income.

(vi)   Filing of income-tax return is necessary in spite of fact that after allowing this rebate under section 87A no tax is payable.

Quantum of Rebate

The total amount of rebate allowed under section 87A would be—

(i)   Rs. 12,500/-; or

(ii)  the total tax payable,

Ø  whichever is less.

For Assessment year		Applicable only if total income does not exceed Rs.	Amount of rebate under section 87A
2020-21		5,00,000	12,500
2019-20		3,50,000	2,500
2018-19		3,50,000	2,500
2017-18		5,00,000	5,000
2016-17	5,00,000			2,000
2015-16	5,00,000			2,000
2014-15	5,00,000			2,000

PROVISIONS ILLUSTRATED

Total Income (in Rs.)	Tax payable (before Cess)	Rebate under section 87A	Tax payable + 4% Health and Education Cess
3,00,000	2,500	2,500	Nil
4,00,000	7,500	7,500	Nil
5,00,000	12,500	12,500	Nil
5,10,000	14,500	Nil	14,500 + 580