Introduction
- Rebate u/s 87A provides benefit on tax payment to a RESIDENT INDIVIDUAL.
- The only condition to avail the benefit is “Your total taxable income shall not exceed the threshold limit” i.e up to 5,00,000.
- Total taxable income exceeding Rs. 5,00,000 will not be able to take tax benefit under Section 87A.
Quantum of Rebate u/s 87A
If an individual’s total taxable income is upto Rs. 5 lakhs then he will get the tax benefit of
- Rs. 12,500 or
- The amount of tax payable
whichever is lower
Total Taxable Income for Claiming rebate u/s 87A
Total Taxable Income for the purpose of claiming rebate u/s 87A shall be your:
| Particulars | Amount |
| Gross Total Income | XXX |
| Less: Deduction u/s 80C to 80U | XX |
| Taxable Income | XXX |
Steps for calculate rebate u/s 87A
sequential steps involved in the calculation of rebate u/s 87A are
- 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.
- On your balance tax payable (if any) calculate the amount of Health and Education Cess payable @ 4%.
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
| PARTICULARS | AMOUNT |
| 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 Total Taxable Income is below the threshold of Rs. 5 lakhs, hence taxpayer Mr. Santosh is eligible for claiming rebate u/s 87A.
