Short Topic On Deduction Under Section 87A

‘Taxes made easy’, was always an ever promoted agenda of the Indian government. With the announcement of the Budget 2019-2020, government briefed for tax goals of the economy and the essential amendments required in the present direct tax laws. Several changes to the tax rules were proposed for the coming year 2019-2020. One such key amendment was made under Section 87A of the Income Tax Act.

As per the Income-tax Act, 1961 any individual being a resident of India, having a taxable Income below the exemption limit is entitled to claim a rebate under Section 87A.

Section 87A – Basics

Section 87A in the Income-tax Act was proposed by the Finance Bill of 2013 to provide a basic tax rebate to the taxpayers having a low-income background. As per the existing provisions, any individual whose income lies below Rs 3,50,000 is eligible to claim a tax amount rebate under this section. The section states for the tax rebate available to an Individual taxpayer which can be 100% of the total tax amount calculated of his total income or Rs 2500 whichever is lower.

Budget 2019 Update: Adding numerous tax benefits for the taxpayer, the government further hiked the minimum tax rebate limit to Rs 12,500 from Rs 2500 under Section 87A.

Section 87A – Eligibility

To claim rebate under Section 87A one should:

– Be a resident individual taxpayer of India

– Hold total income after deducting eligible deductions under Section 80, below the total exemption limit.

Note: The rebate shall;

– be available on an amount of tax calculated before adding any Education or related cess.

– be available to only an Individual & not to any Firm/Company/HUF. Senior citizens above 60 years can also claim exemption under this section.

Section 87A – Form

To claim exemption under Section 87A one has to put the value of tax amount in the column ‘Rebate under Section 87A’ while filling the Income tax return under any respective ITR form, ITR 1, ITR2, ITR4 etc.

Tax Rebate for AY 2019-20 and 2020-2021 under Section 87A.

Income Tax Amount in AY 2019-2020 Tax Amount AY 2020-2021 Eligible for Rebate under Section 87A Rebate in AY 2019-2020 Rebate in AY 2020-2021
Rs 2,90,000 2000 2000 Y Y 2000 2000
Rs 3,40,000 4500 4500 Y Y 2500 4500
Rs 3,60,000 5500 5500 N Y 0 5500
Rs 4,80,000 11500 11500 N Y 0 11500
Rs 5,00,000 12500 12500 N Y 0 12500
Rs 6,00,000 32500 32500 N N 0 0


Thus, as applicable from FY 2019-2020, an individual taxpayer having income below Rs 5,00,000 becomes eligible to claim tax rebate available under Section 87A.

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