Income Tax efiling in India for FY 2023-24 (AY 2024-25)
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Income Tax Rebate Under Section 87A
As per Section 87A, an income tax rebate is proposed for people who are having a salary less than the pre-defined limit. The Income Tax Act of 1961 provides several provisions that offer tax relief to taxpayers to reduce their tax liabilities. Individuals or taxpayers can take a tax rebate us 87a when they are having a net income of Rs. 5,00,000 in a provided financial year. Candidates that are eligible can claim a tax rebate of up to Rs. 12,500, the total tax payable in an assessment year, or whichever is lower (before adding cess). A tax rebate is a kind of discount that is proposed on your tax liability. The income tax rebate is offered only to individuals in Section 87A and (Not the people of Hindu Undivided Families, BOI/ AOP, Company, or Firm). However, the net rebate amount should not exceed the amount of the income tax computed before the deduction on the total income of the individuals with whom they will be assessed for the assessment year.
What are the requirements to avail of the tax rebate us 87A
Individuals are required to meet the eligibility criteria to claim the tax rebates under Section 87A as follows- The Individuals must be Indian citizens. The net taxable income of an individual must not be more than Rs. 5,00,000 after deduction under Section 80D, 80C, etc as defined under Chapter VI-A. Senior Indian residents must be between 60 years to 80 years to claim a tax rebate under section 87A. Super senior Indian residents who are more than 80 years do not qualify to claim a tax rebate under section 87A. Besides, before adding 4% of the health and education cess, this tax rebate applies to the total tax payable in a given assessment year
Procedures to claim the tax rebate under section 87A
An individual whose annual income is below Rs. 5,00,000 Lakh and whose tax liability is more than Rs. 2,000 is eligible to avail of the income tax rebate under Section 87A. This can be accomplished while filing income tax returns and instantly after adding higher and secondary education cess. Following is the step-wise process that needs to be pursued to claim the tax rebates under Section 87A- Firstly, calculate your net total income for the financial year. Secondly, lessen your available tax deductions for tax savings, investments, etc. Thirdly, you can get your net income after decreasing the tax deductions. Then declare your net income and tax deductions in tax returns. Fourthly, you can claim a tax rebate under section 87A if your total income does not exceed Rs. 5 lakh. And lastly, the maximum tax rebate under section 87A for the annual year 2022-23 is Rs. 12,500. Here, it is very crucial to know that the net income shall not surpass Rs. 5 lakhs if the rebates are to be claimed under Section 87A.
How to calculate rebate
Below is an example of rebate calculation under section 87A for resident individuals (below 60 years of age) earning different levels of income: Income Source (FY 2021-22) Income Rs. Gross Total Income 6,50,000 Less: Deduction* under section 80C 1,50,000 Total Income 5,00,000 Income Tax (5% on RS.2.5 lakh to Rs.5 lakh) 12,500 Less: Section 87A rebates 12,500 Tax Payable NIL
Eligibility to claim rebate u/s 87A for FY 2020-21 and FY 2019-20
To claim the advantage of rebate under section 87A for the financial year 2021-22, and 2020-21, it is necessary to fulfill the following conditions: You are a resident individual Your gross income should not exceed Rs 5 lakh in an FY after reducing the deductions under Chapter VI-A (Section 80C, 80D and so on). Here remember that the tax rebate is limited to Rs. 12,500. This shows us that you do not need to pay any tax if your total payable tax is less than Rs. 12,500. Here is one important thing to note the rebate will be levied on the total tax before adjusting the health and education cess of 4%. Here are a few calculations of Section 87A given a rebate for resident individuals (below 60 years) earning diverse levels of income- Total Income (Rs) Tax payable before cess (Rs) Rebate u/s 87A (Rs) Tax Payable + 4% Cess (Rs) 2,70,000 1,000 1,000 0 3,60,000 3,000 3,000 0 4,90,000 12,000 12,000 0 12,00,000 1,72,000 0 1,79,400
Eligibility to claim tax rebate Under Section 87A for F.Y. 2018-19 and F.Y. 2017-18
To claim the tax rebate under section 87A for the financial year 2018-19 and 2017-18 the eligibility criteria was as follows- You are a resident individual. Total income after the deductions under Chapter VI-A (section 80C, 80E, 80D, and so on) is below Rs. 3.5 lakh The tax rebate limit was Rs 2,500. Therefore, if your payable tax did not exceed Rs 2,500, then you would have to pay tax. We have mentioned below some examples of Section 87A rebates for resident individuals for the financial year 2017-18 and FY 2018-19- Total Income (Rs) Tax payable before cess (Rs) Rebate u/s 87A (Rs) Tax Payable + 4% 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+cess**
Rebate limit of All Financial Years under section 87A
Amount of Rebate Allowed u/s 87A Limit on Gross Taxable Income Financial Year Rs. 2,000 Rs. 5,00,000 2013-2014 Rs. 2,000 Rs. 5,00,000 2014-2015 Rs. 2,000 Rs. 5,00,000 2015-2016 Rs. 5,000 Rs. 5,00,000 2016-2017 Rs. 2,500 Rs. 3,50,000 2017-2018 Rs. 2,500 Rs. 3,50,000 2018-2019 Rs. 12,500 Rs. 5,00,000 2019-2020 Rs. 12,500 Rs. 5,00,000 2020-2021 Rs. 12,500 Rs. 5,00,000 2021-2022
Frequently asked questions
What is section 87A?
Who is eligible for the 87A rebate us 87a?
What is the rebate u/s 87A for AY 2022 23?
Who can claim this rebate under section 87A?
Are NRIs allowed claiming the rebate under section 87A?
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