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Indian Income Tax Rebate Under Section 87A is one of the Indian income tax provisions that help Indian taxpayers reduce their Indian income tax liability. Indian citizens can claim an Indian Income Tax Rebate under section 87A if their total Indian income does not exceed Rs 5 lakh in a financial year. The Indian Income Tax Rebate under section 87A will make the Indian taxpayer’s India-based India Income Tax Liability become nil.
The key to claiming this rebate is ensuring that your total net taxable income, which includes all incomes from any source, does not exceed Rs 5 lakh in a financial year. Furthermore, you must have been resident in India for at least 182 days during the said financial year and have been outside India for no more than 60 days during the previous Indian financial year. Indian citizens who are Indian residents and not Indian citizens or Indian tax-resident but non-Indian citizens or Indian non-tax-resident do not qualify for Indian Income Tax Rebate under section 87A.
The person can claim an Indian Income Tax Rebate under section 87A only if he/she files an Indian Income Tax Return. If the Indian citizen does not file an Indian Income Tax Return, the Indian Revenue Department will treat him/her as an Indian non-tax-resident even if he/she is an Indian resident, and no Indian Income Tax Rebate under section 87A can be claimed.
Latest Update:
On 9th September 2021, the CBDT announced a new timeline for certain direct tax obligations for AY 2021-22.
Prepare the following items to claim the tax rebate under section 87A.
An example of the calculation of a rebate under section 87A in the case of an individual who is below 60 years old in AY 2020-21
Source of income (FY 2019-20) | Income (Rs) |
Gross total income | 6,50,000 |
Less: Deduction* under section 80C | 1,50,000 |
Total income | 5,00,000 |
Income-tax (@ 5% from Rs 2.5 to 5 lakh) | 12,500 |
Less: Rebate u/s 87A | 12,500 |
Tax payable | Nil |
You can get a section 80C tax deduction for tax-saving, a section 80D medical insurance deductible, and 80CCD contribution to NPS deductible, an 80G donation deductible, and other deductions to arrive at your total income.
By following the above-mentioned steps, you can claim a rebate under section 87A.
The following requirements must be met in order to qualify for the benefit of rebate under Section 87A for FY 2020-21 and FY 2019-20:
The tax refund is capped at Rs 12,500. This implies that if your total tax obligation is less than Rs 12,500, you will not have to pay any taxes.
Note that, before adding the health and education cesses of 4%, the rebate will be deducted from the total tax. Here are a few examples of resident individuals’ section 87A rebates, including senior citizens:
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 | 1,72,500 | 0 | 1,79,400 |
If you’re looking to claim a tax rebate under section 87A for FY 2017-18 or FY 2018-19, the following are the requirements:
The amount of tax refund is restricted to Rs. 2,500. As a result, you will not have to pay any taxes if your tax bill does not exceed Rs. 2,500.
Do note that the tax rebate will be applied to the total tax before adding the health and education cess of 4% (FY 2018-19) or education cess of 3% (FY 2017-18).
Here are some examples of section 87A rebates for individual residents in FY 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** |
** The tax payable for FY 2017-18 is Rs. 2500 plus three percent cess and the tax payable for FY 2018-19 is Rs. 2600, i.e., Rs. 2500 plus four percent cess
Financial Year | Limit on Total Taxable Income | Amount of rebate allowed u/s 87A |
2021-22 | Rs. 5,00,000 | Rs. 12,500 |
2020-21 | Rs. 5,00,000 | Rs. 12,500 |
2019-20 | Rs. 5,00,000 | Rs. 12,500 |
2018-19 | Rs. 3,50,000 | Rs. 2,500 |
2017-18 | Rs. 3,50,000 | Rs. 2,500 |
2016-17 | Rs. 5,00,000 | Rs. 5,000 |
2015-16 | Rs. 5,00,000 | Rs. 2,000 |
2014-15 | Rs. 5,00,000 | Rs. 2,000 |
2013-14 | Rs. 5,00,000 | Rs. 2,000 |
Can NRIs claim a rebate under section 87A?
This rebate is only available to resident individuals. As a result, non-residents are not eligible for a rebate under 87A.
Can this rebate be claimed by anyone?
Only individuals are eligible for this incentive. This financial benefit is only available to organizations, HUFs, or corporations.
How to claim rebate u/s 87A?
According to the Indian tax code, only natural individuals are eligible for a tax rebate under U/s 87A, which means HUFs and companies are not eligible. This refund may be claimed while filling an ITR return. For the 2019-20 financial year, if your self-assessment tax payment is less than Rs 5 lakh and you claim deductions.
How to calculate rebate u/s 87a?
If the individual’s total income is less than Rs 5 Lakhs after taking deductions, they are entitled to a tax rebate under Section 87A. As a result, taxable income after deductions must be verified to determine whether the rebate is applicable.
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TRAN 1 & TRAN 2 Format, Due Date