Rebate u/s 87A
- Rebate u/s 87A provides benefit on tax payment to a RESIDENT INDIVIDUAL.
- Only the taxpayers falling under the specified threshold limit i.e 5,00,000 can claim the benefit of rebate u/s 87A.
- If an individual’s total taxable income is up to Rs. 5 lakhs then he will get the tax benefit of
– Rs. 12,500 or
– The amount of tax payable
(whichever is lower)
Steps for computation of Rebate U/S 87A
- Calculate your Gross Total Income(GTI).
- Reduce the deductions under sections 80C to 80U.
- Calculate your Tax Payable as per Income Tax slabs.
- Deduct the amount of rebate allowed.
Example
Total Taxable Income for the purpose of claiming rebate u/s 87A shall be your:
Gross Total Income xxxx
Less: Deduction u/s 80C to 80U xxx
Example to understand the calculation of Total Taxable Income for rebate u/s 87A
Mr. Santosh, a resident individual, aged 30 years, has
| PARTICULARS | AMOUNT |
| Total Income | Rs. 5,75,000 |
| Investments made u/s 80C | Rs. 1,50,000 |
| Medical policy taken u/s 80D | Rs. 25,000 |
What will be the total taxable Income of Mr Santosh for Assessment Year 2022-23.
Solution: Total Taxable Income of Mr Santosh will be
| Total Income | Rs. 5,75,000 |
| Less : Investments made u/s 80C | Rs. 1,50,000 |
| Less : Medical policy taken u/s 80D | Rs. 25,000 |
| Total Taxable Income (TTI) | Rs 4,00,000 |
Since, his TTI is below the threshold of Rs. 5 lakhs, hence taxpayer Mr. Virat is eligible for claiming rebate u/s 87A.
FAQ’s
Q. Can NRI claim rebate u/s 87A?
ANS: No, the benefit of rebate u/s 87A is not available to Non-Resident Indians (NRI’s)
Q. Is rebate u/s 87A available to HUF or its members?
ANS: Only the members of HUF can claim rebate u/s 87A in their individual capacities as a resident of India. But, no rebate shall be allowed to HUF.
Q. Is rebate u/s 87A available on agricultural income?
ANS: Yes, income tax rebate u/s 87A is available on taxable income which includes agricultural incomes as well.
Q. Is income tax rebate u/s 87A available on Long Term Capital Gains (LTCG)?
ANS: Rebate u/s 87A is not available on sale or transfer of equity shares i.e. on Long Term Capital Gains from equity or others as specified under section 112A. It is available on all other capital gains
Q. What is the income tax exemption limit for calculation of income tax rebate under section 87A?
ANS: For the purpose of the calculation of Sec 87A, the income tax exemption limit shall be the same as basic exemption limit. Currently this limit stands at Rs. 2,50,000. However if your total income is up to Rs. 5,00,000 then you are entitled to get the benefit of tax rebate u/s 87A of Rs. 12,500 or 100% of tax amount whichever is lower
