Rebate of income tax under section 87A

By | December 20, 2015

Rebate of income tax under section 87A of Income Tax Act 1961

Rebate of income tax under section 87A

Section 87A has been Inserted by the Finance Act, 2013 in Income Tax Act  w.e.f. 1-4-2014 to allow rebate of Income Tax

Rebate of income tax in case of certain individuals.

An assessee, being an individual resident in India, whose total income does not exceed 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 two thousand rupees, whichever is less.]

Period from which Rebate of income tax under Section 87A is available  ?

This rebate will be available from the assessment year 2014-15 onwards.

Whether Rebate of income tax under Section 87A is available is avaialble to both male and female ?

Rebate of income tax under Section 87A is available to both Male and Female assesses

Conditions to be satisfied for claiming Rebate of income tax under Section 87A ?

Rebate of income tax under Section 87A will be available if the following two conditions are satisfied –

  1. Taxpayer is a resident individual (he may be ordinarily resident or not ordinarily resident)
  2. His total income or net income or taxable income (i.e., gross total income minus deduction undersections 80C to 80U) is Rs. 5 lakh or less.

Whether Rebate of income tax under Section 87A is available to Super Senior citizens ?

Rebate of income tax under Section 87A  is not avaiable to super senior citizen, since he is already fully exempted up to Rs. 5,00,000

Amount of Rebate of income tax under Section 87A ?

The amount of rebate is 100 per cent of income-tax payable on total income or Rs. 2,000, whichever is less. This rebate will be available from income-tax (before adding surcharge and education cess).

When the  Rebate of income tax under Section 87A is not available ?

Rebate under section 87A is not available in the case of a non-resident individual, resident or non-resident HUF/AOP/BOI or any taxpayer other than resident individual.

What is the Finance Minister’s Budget Speech while providing Rebate of income tax under Section 87A  ?

The Finance Minister’s Budget Speech provides as under:

124. In a constrained economy, there is little room to raise tax rates or large amounts of additional tax revenues. Equally, there is little room to give away tax revenues or the tax base. It is a time for prudence, restraint and patience.

125. The rates of personal income-tax have survived four Finance Ministers and four Governments. The current slabs were introduced only last year. Hence, I am afraid, there is no case to revise either the slabs or the rates. Besides, even a moderate increase in the level of threshold exemption will mean that hundreds of thousands of tax payers will go out of the tax net and the tax base will be severely eroded. Nevertheless, I am inclined to give some relief to the tax payers in the first bracket of Rs. 2 lakh to Rs. 5 lakh. Assuming an inflation rate of 10 per cent and a notional rise in the threshold exemption from Rs. 2,00,000 to Rs. 2,20,000, I propose to provide a tax credit of Rs. 2,000 to every person who has a total income up to Rs. 5 lakh. 1.8 crore tax payers are expected to benefit to the value of Rs. 3,600 crore.

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