A rebate is one of the income tax provisions that help taxpayers reduce their tax liability. Taxpayers earning an income under a certain limit have the benefit of paying marginally lower taxes.
Let’s know the rebate available under section 87A in detail:
Eligibility to claim rebate u/s 87A
You can claim the benefit of rebate under section 87A for FY 2020-21 only if the following conditions are fulfilled:
- a resident individual
- total income after reducing the deductions under chapter VI-A does not exceed Rs 5 lakh in an FY.
The tax rebate is limited to Rs 12,500. if your total tax payable amount is less than Rs 12,500, then you will not have to pay any tax.
Do not that the rebate will be applied to the total tax before adding the health and education cess of 4%.
Examples of section 87A
| Total Income | Tax payable before cess | Rebate u/s 87A | Tax Payable + 4% Cess |
| 2,60,000 | 5,00 | 5,00 | 0 |
| 3,60,000 | 3,000 | 3,000 | 0 |
| 4,90,000 | 12,000 | 12,000 | 0 |
| 12,00,000 | 1,72,500 | 0 | 1,79,400 |
Eligibility to claim rebate u/s 87A
If filing the income tax returns for FY 2017-18 or FY 2018-19, the acceptability guidelines to claim tax rebate under section 87A are as under:
a resident individual
total income after deductions under chapter VI-A is less than Rs 3.5 lakh
The amount of rebate is limited to Rs 2,500. So, if your total tax payable amount does not exceed Rs 2,500, then you will not have to pay any tax.
That the tax rebate will be utilized to the total tax before adding the health and education cess of 4% (FY 2018-19) or education cess of 3% (FY 2017-18).
examples of section 87A rebates
| Total Income | Tax payable before cess | Rebate u/s 87A | Tax Payable + 4% Cess |
| 2,65,000 | 750 | 750 | 0 |
| 2,70,000 | 1,000 | 1,000 | 0 |
| 3,00,000 | 2,500 | 2,500 | 0 |
| 3,50,000 | 5,000 | 2,500 | 2,500+100=2600 |
Examples of section 87A rebates for FY 2017-18:
| Total Income (Rs) | Tax payable before cess (Rs) | Rebate u/s 87A (Rs) | Tax Payable + 3% Cess (Rs) |
| 2,65,000 | 750 | 750 | 0 |
| 2,70,000 | 1,000 | 1,000 | 0 |
| 3,00,000 | 2,500 | 2,500 | 0 |
| 3,50,000 | 5,000 | 2,500 | 2,500+75= 2,575 |