Section 87a of the Income Tax Act was introduced in Finance Act, 2013. The section was introduced to provide benefits to individuals whose total net income is below Rs.5,00,000 (Rs. 3,50,000 from F.Y 2017-18)
Income Tax Rebate under Section 87A:
Section 87A of Income-tax Act, provide for a rebate of an amount equal to hundred percent of such income-tax or an amount of Rs. 5000/- (Rs. 2500 from Financial Year 2017-18), whichever is less, from the amount of income-tax to an individual resident in India whose total income does not exceed 3,50,000
The rebate under section 87a is available only to individual assessee and not to members of Hindu United Families, AOP/BOI, Firm and Company. Also, the aggregate amount of rebate should not exceed the amount of income tax computed before the rebate on total income of the individual with which they are chargeable for that assessment year.
| S. No. | Financial Year | Rebate |
| 1 | 2017-18 | 2,500/- |
| 2 | 2016-17 | 5000/- |
| 3 | 2015-16 | 2000/- |
| 4 | 2014-15 | 2000/- |
| 5 | 2013-14 | 2000/- |
Few Examples to understand rebate u/s 87A on Income Tax:
| Total Income | Tax payable before cess | Rebate u/s 87A (max allowable) | Tax Payable + education cess |
| 2,75,000 | 1,250 | 1,250 | 0 |
| 3,00,000 | 2,500 | 2,500 | 0 |
| 3,25,000 | 3,750 | 2,500 | 1,250+37.5 |
| 3,50,000 | 5,000 | 2,500 | 2,500+75 |
Key Points of Section 87A of the Income Tax Act, 1961:
Listed below are the key points of Section 87A of the Income Tax Act, 1961.
Amended section 87A is applicable from 1st April of that financial year, it is applicable to the assessment year and its subsequent assessment years
Maximum Rebate amount Rs. 5000 (Rs. 2500 from F.Y 2017-18)
Only Indian residents can avail the rebate, NRIs are not eligible for the rebate
Both male and female assesses are eligible for the rebate
Rebate benefit is not available to super senior citizens
This rebate is deducted from total tax before adding Education Cess(3%).
Rebate under Section 87A of Income Tax Act,1961, Section 87A, 87a, section 87a income tax, Rebate under Section 87A of Income Tax Act,1961