what is 87 A Rebate?

  • 87 A Rebate is one of the income tax provisions that help taxpayers to reduce their income tax liability.
  • If your total income does not exceed ₹5,00,000 then you will be eligible to claim rebate in income-tax u/s 87A up to ₹12,500 at the time of filing.
  • In the year 2013-14 the government of India introduced rebate u/s 87A. 
  • This tax benefit will be provided to individual tax payers who are in the 10% tax slab.
  • Section 87A would be available only if total income not more than ₹5 Lakh. 
  • Rebate shall be deducted from the amount of income-tax and not from total income.
  • This rebate will help a tax payer to reduce their tax liability.
  • You can claim this rebate if your total income i.e., after deductions not exceeding 5,00,000/-.

How much is the rebate applicable U/S 87A?

  • If an individual’s total taxable income is upto/below Rs. 5 lakhs then he will get the tax benefit of Rs. 12,500/- or amount of tax payable, whichever is lower
  • For example: If the total tax payable of a tax payer is 12150/-, then the amount of rebate he is going to get will be 12150/-(Either the rebate amount of 12500/- or total amount payable by him, whichever is lower).

Key points:

  • To claim the rebate, you must be a residential individual.
  • NRIs are not eligible for the rebate.
  • Rebate is not applicable for super senior citizen.
  • Your total income after VI A deductions, do not exceed 5,00,000/-.
  • Rebate will be applied to the total tax before adding the health and education cess of 4%.
  • Section 87A rebate will be available under old and the new tax regime.
  • We cannot claim this rebate amount more than 12500/-.

How to calculate rebate u/s 87a?

Calculate your gross total income and reduce deductions under Section 80C to 80U.

If the amount is below Rs 5 lakh, you are eligible for a tax rebate, i.e. RS.12500/- you will get as a rebate U/S 87A.

If taxable income is more than Rs 5 lakh, then no rebate can be applicable.