What is Section 87A of the Income Tax Act?
Income Tax Act

What is Section 87A of the Income Tax Act?

Section 87A of the Income Tax Act provides income rebates for those whose income falls under the 10% (Now 5%) tax slab. This is only available for individuals and not for members of Hindu Undivided Families (HUF) or companies.

(आयकर अधिनियम की धारा 87A उन लोगों के लिए आय में छूट प्रदान करता है जिनकी आय 10% (अब 5%) कर स्लैब के अंतर्गत आती है। यह केवल व्यक्तियों के लिए उपलब्ध है और हिंदू अविभाजित परिवारों (एचयूएफ) या कंपनियों के सदस्यों के लिए नहीं है।

1. Eligibility to Claim Rebate under Section 87A FY 2019-20 (AY 2020-21)

You can claim tax rebate under this provision if you meet the following conditions:

  1. You must be a RESIDENT INDIVIDUAL; and
  2. Your Total Income after Deductions (under Section 80) doesn’t exceed Rs 5 lakh.
  3. The rebate is limited to Rs 12,500. This means that if the total tax payable is lower than Rs 12,500, then that amount will be the rebate under section 87A. This rebate is applied to the total tax before adding the Education Cess (4%).

Following are a few examples of the 87A rebate allowed to Resident Individuals including Senior Citizens:  

Total Taxable Income (after Deductions) Tax payable before cess Rebate u/s 87A Tax Payable + 4% Cess
270000 1000 1000 0
360000 3000 3000 0
490000 12000 12000 0
120000 172500 0 179400

Here we can see that the taxpayer not need to pay tax up 4,90,000/- and taxpayer can take rebate upto 12,000 in F.Y. 2019-20

Frequently Asked Questions

Qus. Can NRIs claim rebate under section 87A?

Ans. No, this rebate is only allowed for Resident Indians. Therefore, taxpayers qualifying as non- Residents are not eligible for a rebate under 87A.

Qus. Can this rebate be claimed by anyone?

Ans. This rebate is only allowed to individuals. HUFs or firms or companies cannot claim this rebate.

Qus. How can I claim section 87A rebate in Income Tax Portal?

Ans. Income Tax Portal automatically gives rebate while e-filing, if you are eligible.

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