Tax Rebate Under Section 87A

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Section 87a of the Income Tax Act

The primary responsibility of any government is to safeguard the citizens of its nation and the Indian government is constantly working to achieve this goal. To help the government to fulfill this dream smoothly, the citizens of India are required to pay taxes as per their income. The taxes help the government to build the infrastructure of the nation. However, Indian tax law also offers many provisions to reduce tax liabilities and Section 87a of the Income Tax Act, 1961 is one of those provisions.

The income tax rebate provided in Section 87a is offered for people who have a salary below the pre-defined limit. Basically, this act is there to bring down the tax burden for lower salary bracket people.

Section 87a – Income Tax Rebate

The income tax rebate under Section 87a offers some relief to the taxpayers who fall under the tax slab of 10%. Any individual whose annual net income is not more than Rs.5 Lakh is eligible to claim tax rebate under Section 87a of the Income Tax Act, 1961. This means an individual can get a rebate on tax of up to Rs.2, 000. In this way, the deduction will be Rs.2000 or 100% of the salary of an individual, whichever is smaller.

The income tax rebate in Section 87a is offered only to individuals and not the people of Hindu Undivided Families, BOI/ AOP, Company, or Firm. Moreover, the total rebate amount should not be more than the amount of the income tax calculated before the deduction on the total income of the person with which he/she will be charged for the assessment year.

Section 87a – Points to Remember

Mentioned below are the points to remember for Section 87a:

  • Section 87a is added to the Income Tax Act, 1961 for the betterment and is applicable from the April 01st of the financial year. This act is applied to a tax assessment year and its subsequent tax assessment years.
  • The non-residential Indians are not eligible to get the benefits of this tax rebate. Indian residents only are eligible to avail this tax deduction benefit.
  • Both female and male assesses can get the benefits of this tax rebate.
  • Super senior citizens are not eligible to get a tax rebate under Section 87a.
  • Section 87a of the Income Tax Act also restricts the tax rebate to the total tax that is payable, if it is less than Rs.2, 000.

Section 87a – Claim Process

An individual whose annual income is less than Rs.5 Lakh and his/her tax liability is greater than Rs.2, 000 is eligible to claim the income tax rebate under Section 87a. This can be done at the time of income tax return filing and immediately after adding higher and secondary education cess, or education cess.

Eligibility Criteria to Claim Income Tax Rebate under Section 87a for Financial Year 2019 – 20 (AY 2020 – 21)

One can claim tax rebate under Section 87a of the Income Tax Act if he/she meets with the following conditions:

  • One must be a resident individual.
  • The total income of an individual minus the Deductions (under Section 80) must be equal to or less than Rs.5 Lakhs.
  • The income tax rebate can be up to Rs.12, 500. In this way, if an individual is paying an income tax lower than Rs.12, 500, then the amount gets the rebate under Section 87a. This income tax rebate is applied to the total tax before adding the Cess on Education (4%).

Mentioned below are some examples of the rebate allowed under Section 87a to the individuals who are residents and to Senior Citizens:

Total Annual Income (Rs.)

Rebate Under Section 87a

Tax Payable before Cess

Tax Payable +4% Cess

2, 70, 000

1, 000

1, 000

0

3, 60, 000

3, 000

3, 000

0

5, 40, 000

0

20, 500

21, 320

12, 00, 000

0

1, 72, 500

1, 79, 400

Section 87a - Frequently Asked Questions 

Question 1: Can non-residential Indians avail the tax deduction benefit provided under Section 87a of the Income Tax Act, 1961?

Answer: No, only Indian residents are eligible to avail the tax rebate offered under Section 87a.

Question 2: Define total income?

Answer: The total income of an individual is per head total income that includes the salary of an individual, his/her income from property/house, income from profession & business, capital gains income, income from different other sources.

Question 3: Are senior citizens eligible to get tax rebate under Section 87a?

Answer: Yes, the senior citizens are eligible to avail tax rebate under Section 87a. However, those who are 60 years old but are less than 80 years can get this benefit.

Question 4: Can this income tax rebate be claimed by any person?

Answer: The income tax rebate offered under Section 87a can be availed by an individual who is an Indian resident. The companies and Hindu Undivided Families (HUFs) cannot avail its benefits.

Question 5: Please mention the rebates allowed in previous years?

Answer: A table of allowed rebates is given below:

S.No.

Available Rebate

For the Financial Year

1

Rs.2, 500

2018-19

2

Rs.2, 500

2017-18

3

Rs.5, 000

2016-17

4

Rs.2, 000

2015-16

5

Rs.2, 000

2014-15

6

Rs.2, 000

2013-14

 

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