Section 87A

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.

The Income Tax Act, 1961 provides for levy, administration, collection and recovery and Income Tax in India. The Income Tax Act, each section caters to certain part of Income Tax law or rule. 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.

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.2000 under the section 87a. The amount of rebate will be 100% of income tax or Rs.2,000 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 year 2015-2016 given that their total net income does not exceed Rs.5 lakh in an year.

Key Points of Section 87A

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.2,000

Eligibility to Claim Rebate Under Section 87A FY 2020-21

Tax rebates can be claimed under Section 87A FY 2020-21 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.2000. The rebate can be claimed while filing the tax return just before adding education cess, secondary and higher education cess.

FAQ's On Section 87A

  1. Can NRIs avail the tax rebate?

    No, only resident individuals can avail tax rebate under this section.

  2. What if your tax liability is Rs.2,000?

    You won’t be eligible for tax rebates if your tax liability is less than Rs.2,000.

  3. Can anyone with an income of below Rs.5,00,000 avail tax rebate?

    Members of Hindu United families,AOP/BOI, Firms, Companies, Super senior citizens are not eligible for the tax rebate.

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