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.



, ,



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 Avatar

    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 ?

    1. Tax Dost Avatar
      Tax Dost

      Yes you are eligible for rebate under section 87A

  2. amit roy Avatar
    amit roy

    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?

    1. Tax Dost Avatar
      Tax Dost

      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 Avatar

    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.