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Section 87A of the Income Tax Act Rs 12500 Tax Rebate Calculation

Section 87A of the Income Tax Act Rs 12500 Tax Rebate Calculation. Section 87A of the Income Tax Act provides income rebates for those whose income falls under the 10% tax slab. This is only available for individuals and not for members of Hindu Undivided Families or companies. Section 87A is one of the many sections of the Income Tax Act. 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.

Section 87A of the Income Tax Act Rs 12500 Tax Rebate Calculation

Clause 8 of the Finance Bill seeks to amend section 87A of the Income-tax Act to provide relief to the individual taxpayers by increasing the maximum amount of tax rebate to Rs 12500 rupees from existing Rs 2500 rupees. The tax rebate shall now be admissible to taxpayers having total income up to Rs 500000, instead of existing Rs 350000.
Income Tax Rebate under Section 87A:
  • Section 87A of the Income Tax Act, 1961 was launched to offer some relief for taxpayers who fall under the 10% tax slab. Any individual whose total net income does not cross Rs.5 lakh can claim tax rebate under section 87A of the Income Tax Act, 1961. One can get a tax rebate of up to Rs.12500 under the section 87A from FY 2019-20. The amount of rebate will be 100% of income tax or Rs.12500 whichever is lesser.
  • 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.
  • Rebate under section 87A is available to resident individuals for Assessment years mentioned given that their total net income does not exceed Rs.5 lakh in an year.
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
  • 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
  • Rebate is restricted to ‘total tax payable’ if the total tax payable is less than Rs.12500
Eligibility to Claim Rebate Under Section 87A FY 2019-20 AY 2020-21
  • Tax rebates can be claimed under Section 87A FY 2019-20 if the following conditions are met:
  • Must be a resident individual of India
  • The limit of the rebate is Rs.12,500. If the total payable tax is lesser than this, that amount will be taken as the rebate. This rebate will be applied to the total tax before the Education Cess of 4% is added.
  • Total income, less the deductions (under Section 80), should be equal to or less than Rs.5 lakh.
How to Claim Refund under Section 87a of the Income Tax Act, 1961?
  • One can claim their refund under Section 87A of the Income Tax Act, 1961 only if their income is less than Rs.5 lakh and their tax liability is more than Rs.12500. The rebate can be claimed while filing the tax return just before adding education-cess, secondary and higher education-cess.
Clarifications on Sec 87A from AY 2019-20:
  1. This Sec 87A Rebate of Rs.12500 is applicable to Individuals Indian Male and Female Residents only.
  2. Basic Exemption Limit has not been increased. (Income Tax for 2019-20 -- Click Here)
  3. This Relief is applicable to all Individuals only if the Total Income is less than Rs.5,00,000
  4. This Section 87A is w.e.f 1.4.2019 means, it is applicable from Assessment Year 2020-21, means for those who are filling their Income Tax Returns for the Financial Year 2019-20.
  5. Tax Rebate is applicable to Senior Citizens up to 80 Years of age only.
  6. First Calculate the Total Taxable Income after making all Possible and eligible Deductions from your Income. ( If the Total Taxable Income is Less than Rs.5,00,000 then you are to eligible claim a Rebate of  Rs.12500). details at
  7. From the previous step, we get the Income liable to Tax at Normal Rates.
  8. From the Income Liable to Tax, Calculate the Income Tax.
  9. Now Deduct Max of Rs.12500 as Rebate.
  10. Means It is deductible from income-tax before calculating education cess. The amount of rebate is 100 per cent of income-tax or Rs. 12500, whichever is less.
  11. After deducting the Rebate, pay the tax after calculating the education cess,  That's it.
Model Calculation of Rs.12500 Rebate in Income Tax as per Section 87A
  1. Let us assume that Your Gross Income is Rs.5,80,000
  2. Let All Deductions and Exemptions is Rs.1,50,000. Then your total Income after applying all eligible deductions is Rs.4,30,000.
  3. Hence, Now the Net Taxable Income will become Rs.4,30,000.
  4. Now, applying 5% Tax on Rs.1,80,000 (Rs.3,30,000 - Rs.2,50,000) will be Rs.9000.
  5. As the Taxable Net Eligible Income is Less than Rs.5,00,000, apply Tax Rebate u/s 87A upto a Max of Rs.12,500.
  6. As the Rebate of Rs 12500 is more than Rs 9000 Tax to be paid.. No Tax is applicable.
  7. If the Tax is applicable then, Add Education Cess, Higher and Secondary Education Cess 4% .


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