Introduction-
An Individual assessee of any age can avail rebate under section 87A, whose net taxable income does not exceed Rs. 3,50,000 during the F.Y. 2018-19, Now In Budget 2019, The Rebate under 87A will be allowed in F.Y. 2019-20 only for those peoples having net taxable income of less than Rs.5 lakh. The maximum limit of tax rebate has increased to Rs.12,500 for the F.Y. 2019-20 as compared to F.Y. 2018-19 i.e. it was Rs. 2,500.
This deduction is not available for HUF, Firms and Companies. To claim the rebate under section 87A, the following conditions to be fulfill-
1. You are a Resident Individual
2. Your net taxable income (i.e.Total Income less Deductions under Section 80) is equal to or less than Rs 3.5 lakhs for the F.Y. 2018-19, For F.Y. 2019-20 it has increased up to Rs. 5.00 Lakh
Amount of Deduction-
For F.Y. 2018-19- The Rebate is allowed up to Rs 2,500 or tax amount whichever is lower. It means that if total tax payable is lower than Rs 2,500, then the amount equal to your tax is eligible for rebate under section 87A.
For F.Y. 2019-20- The Rebate is allowed up to Rs 12,500 or tax amount whichever is lower. It means that if total tax payable is lower than Rs 12,500, then the amount equal to your tax is eligible for rebate under section 87A.
Education Cess @ 3% for the financial year 2017-18 and now it has increased to @ 4% w.e.f. 01.04.2018 will be charged has charged on tax payable after rebate allowed under section 87A.
Example 1-
if Mr. Oberoi is an Indian resident having age of 45 years, his total income for the financial year 2018-19 is Rs. 3,25,000 after allowing deductions under section 80. What will be tax amount or can he avail rebate under section 87A?
Answer-
Tax Liablity for the F.Y. 2018-19 are as under-
Mr. Oberoi has total income of Rs. 3,25,000
Tax amount:
Up to Rs. 2,50,000: Nil
2,50,000 to 5,00,000: 5% (means 5% of Rs. 75,000 ( 3,25,000-2,50,000) = 3,750/-
Less Rebate u/s 87A Rs. 2,500/-
Tax liability: Rs. 1,250/-
Add: Ed. Cess @ 4% =50/-
Total Tax liability= 1,300/-
Example 2-
if Mr. Oberoi is an Indian resident having age of 45 years, his total income for the financial year 2019-20 is Rs. 4,50,000 after allowing deductions under section 80. What will be tax amount or can he avail rebate under section 87A?
Answer-
Tax Liablity for the F.Y. 2019-20 are as under-
Mr. Oberoi has total income of Rs. 4,50,000
Tax amount:
Up to Rs. 2,50,000: Nil
2,50,000 to 5,00,000: 5% (means 5% of Rs. 2,00,000 ( 4,50,000-2,50,000) = 10,000/-
Less Rebate u/s 87A Rs. 10,000/- (Allowed up to Rs. 12,500 or Tax amount whichever is lower)
Tax liability: Rs. 0/-
Add: Ed. Cess @ 4% =0/-
Total Tax liability= 0/-
There is given a table below for different incomes of financial year 2018-19, If you are with the age of below 60 years-
| Total Income |
Tax payable before Ed. Cess |
Rebate u/s 87A |
Net Tax Payable |
Ed. Cess @ 4% |
Total Tax Liability |
| 2,60,000 |
500 |
500 |
0 |
0 |
0 |
| 2,80,000 |
1,500 |
1,500 |
0 |
0 |
0 |
| 3,00,000 |
2,500 |
2,500 |
0 |
0 |
0 |
| 3,20,000 |
3,500 |
2,500 |
1,000 |
40 |
1,040 |
| 3,40,000 |
4,500 |
2,500 |
2,000 |
80 |
2,080 |
| 3,50,000 |
5,000 |
2,500 |
2,500 |
100 |
2,600 |
| 3,60,000 |
5,500 |
0 |
5,500 |
220 |
5,720 |
There is given a table below for different incomes of financial year 2019-20, If you are with the age of below 60 years-
| Total Income |
Tax payable before Ed. Cess |
Rebate u/s 87A |
Net Tax Payable |
Ed. Cess @ 4% |
Total Tax Liability |
| 4,00,000 |
7,500 |
7,500 |
0 |
0 |
0 |
| 4,20,000 |
8,500 |
8,500 |
0 |
0 |
0 |
| 4,40,000 |
9,500 |
9,500 |
0 |
0 |
0 |
| 4,60,000 |
10,500 |
10,500 |
0 |
0 |
0 |
| 4,80,000 |
11,500 |
11,500 |
0 |
0 |
0 |
| 5,00,000 |
12,500 |
12,500 |
0 |
0 |
0 |
| 5,20,000 |
16,500 |
0 |
16,500 |
660 |
17,160 |