Studycafe | Dec 28, 2019 |
Rebate under Section 87A of Income-Tax Act,1961 | Section 87a | Relief us 87a
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 (Rs. 3,50,000 from F.Y 2017-18)
Tax rebate of Rs 12500 for individuals with taxable income of up to Rs 5 Lakh is allowed in FY 2019-20-18 / AY 2020-21.
Income-Tax Rebate under Section 87A:
Bare Act:
Rebate of income-tax in case of certain individuals.
87A. An assessee, being an individual resident in India, whose total income does not exceed [1][three hundred fifty 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 [2][two thousand and five hundred] rupees, whichever is less.
[1] Words “five hundred thousand” shall be sub. for “three hundred fifty thousand” by the Act No. 7 of 2019, w.e.f. 1-4-2020.
[2] Words “twelve thousand and five hundred” shall be sub. for “two thousand and five hundred” by the Act No. 7 of 2019, w.e.f. 1-4-2020.
Conclusions
Tax rebate of Rs 12500 for individuals with taxable income of up to Rs 5 Lakh is allowed in FY 2019-20-18 / AY 2020-21.
S. No. | Financial Year | Rebate |
1 | 2019-20 | 12,500/- |
1 | 2018-19 | 2,500/- |
1 | 2017-18 | 2,500/- |
2 | 2016-17 | 5000/- |
3 | 2015-16 | 2000/- |
4 | 2014-15 | 2000/- |
5 | 2013-14 | 2000/- |
Few Examples to understand rebate u/s 87A on Income-Tax:
Total Income | Tax payable before cess | Rebate u/s 87A (max allowable) | Tax Payable + education cess |
2,70,000 | 1,000 | 1,000 | 0 |
3,00,000 | 2,500 | 2,500 | 0 |
3,25,000 | 3,750 | 3,750 | 0 |
3,50,000 | 5,000 | 5,000 | 0 |
5,00,000 | 12,500 | 12,500 | 0 |
5,50,000 | 5,000 | 22,500 | 22,500 |
Key Points of Section 87A of the Income-Tax Act, 1961:
Listed below are the key points of Section 87A of the Income-Tax Act, 1961.
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