2[REBATES AND RELIEFS] 3[A.—Rebate of income-tax]Central

Section 87A of The Income Tax Act 1961

An assessee, being an individual resident in India, whose total income does not exceed 6[7[five hundred thousand] rupees], shall be entitled to a deduction, from the amount of income-tax (as computed before allowing the deductions under this Chapter) on his total income with which he is chargeable for any assessment year, of an amount equal to hundred per cent of such income-tax or an amount of 8[9[twelve thousand and five hundred] rupees], whichever is less.]

Summary

Practical examples

1Vikram is a resident individual whose total income for the year is 400,000 rupees. His calculated income tax is 7,500 rupees. Under the rules, he is entitled to a rebate of the full 7,500 rupees because it is less than the maximum limit of 12,500 rupees.

2Aditi's total income is exactly 500,000 rupees. Her calculated tax is 12,500 rupees. She gets a full rebate of 12,500 rupees under the Act, effectively making her tax liability zero.

FAQ

1. Can a non-resident claim the Section 87A rebate of The Income-tax Act 1961?

No. Section 87A of the Act specifically limits the benefit to individuals who are residents in India.

Test yourself

Q1.Under Section 87A of The Income Tax Act 1961, what is the maximum total income an individual can have to be eligible for the rebate?

Q2.What is the maximum amount of deduction allowed from the income tax under Section 87A of The Income Tax Act 1961?

Q3.To which category of taxpayers does Section 87A of The Income Tax Act 1961 apply?

Q4.If a resident individual's tax is 8,000 rupees and their income is 400,000 rupees, what is the rebate under Section 87A of The Income Tax Act 1961?

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