Section 87A gives Income tax Rebate/Credit of Rs 2000 for individual whose income is less than Rs 5 lac

Budget 2013 has introduced new Section 87A. This Section gives Extra Income tax rebate of Rs 2000/- to Resident Individuals whose Total Income is less than Rs 5,00,000/-

Conditions to be fulfilled for availing Extra Income tax rebate:

1) Extra rebate u/s 87A is only available to Individuals. This rebate is not available to HUF’s or NRI‘s or corporate or partnership firm.

2) Rebate u/s 87A is available if total income does not exceed Rs 5,00,000/-.

3) Rebate is available to Resident Indians.

FAQ’s on extra rebate of Rs 2000/- u/s 87A.

Que: What is the amount of rebate?

Ans: Extra Rebate of Rs 2000/- is available if Total Income of Individuals is below Rs 500,000/-. This amount will be allowed from Total Income Tax so computed.

Que:  What is the effective date for the Sec 87A rebate ?

Ans: Rebate of Rs 2000/- u/s 87A is available from Financial Year 2013-2014 (Assessment year 2014-2015)

Que : How is calculation made u/s 87A?

Ans: Rebate is allowed to the tune of actual Income tax payable. In case Income tax payable is NIL , no extra rebate/ or Income Tax refund is allowed.

Case I Case II Case III
Total Income 250,000 250,000 250,000
Less: Deduction u/s 80C -50,000 -30,000 -25,000
Net Income 200,000 220,000 225,000
Tax Payable Nil 2000 2500
less: Rebate u/s 87A Nil -2000 -2000
Net Tax Payable Nil Nil 500

You can download Income tax Calculator for year 2013-2014 for Income tax calculations.

Que: My residential Status is NRI. Can I claim rebate u/s 87A?

Ans: Rebate is available only to Individuals who are resident of India. Hence NRI can not claim rebate u/s 87A.

Que: My Income is  Rs 600,000/- and I have invested Rs 100,000/-. Can I claim Rebate u/s 87A?

Ans: Yes, You can claim rebate u/s 87A since, your gross total income has not exceed Rs 500,000/-. See here latest Income Tax Slab

Que: Can Senior Citizen Claim rebate u/s 87A?

Ans: Yes, Senior Citizen can claim rebate, if their total income is less than Rs 5 lac.

In  case Total Income is more than Rs 5,00,000/-, Rebate u/s 87A is not available.

Please note Super Senior Citizen ( above 80 years old) are already exempt from Income tax upto income of Rs 5 lac as per Income tax rates.

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5 Responses to Section 87A gives Income tax Rebate/Credit of Rs 2000 for individual whose income is less than Rs 5 lac

  1. ravikumar says:

    Sir my earnings for the for the current financial year 2013-2014 is rupees 4,00,000/- whether i am eligible for tax rebate under U/s87A ?

  2. amit roy says:

    I work in a PSU bank, my employer already deduct TDS on every month’s salary. Employer will directly give tax credit of Rs. 2000/-, or i have to file IT return to claim it?

    • Tax Dost says:

      Your employer while calculating income taxes will be taking care of the Section 87A. You will not required to claim refund for the same.

  3. upender.e says:

    I am a state government retired employee.
    getting annual pension of Rs.557000/-

    i am a senior citizen of 76years old eligible for Rs.300000/-
    Taxable income Rs.257000/-
    Deduct exemption claimed under 80c Rs.150000/-
    Net taxable income Rs.107000/-

    Income tax at 10% Rs.10700/-
    Deduct rebate under IT act under section 87A Rs.2000/-
    Tax to be paid Rs.8700/-
    Add 3% educational cess Rs.261/-
    Total tax to be paid Rs.8961/-
    OR Rs.8970/-

    Kindly confirm above calculation and inform through my e-mail ID given above.
    Thank you in anticipation;
    With kind regards.

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