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Rebate under Section 87A on income explained

[ecis2016.org] Those earning up to Rs 5 lakhs annual income are exempted from paying any income tax under the provisions of Section 87A.

Section 87A of the Income Tax (I-T) Act helps you lower your taxes. Taxpayers can claim rebate us 87A if their annual income, after Chapter VIA deductions, does not exceed Rs 5 lakhs. Chapter VI A of the I-T Act offers deductions specified from Section 80C to Section 80T.

Section 87A

Introduced in the Finance Act 2003, Section 87A offers relief to taxpayers earning an income up to a certain level – Rs 5 lakhs. However, relief under Section 87A is offered only to individuals residing in India.

Section 87A: Eligibility

  • You must be an individual, which means HUFs cannot claim rebate u/s 87A.
  • You should be a resident of India. Section 87A benefits are not available for NRIs.
  • While senior citizens aged between 60 and 80 years can avail of the rebate us 87A, super senior citizens aged over 80 years are not eligible to claim this benefit.

Rebate us 87A

Under the old, as well as new tax regime, an annual income of up to Rs 5 lakhs has been exempted from income tax in India under 87A. Section 87A entitles a resident individual to claim tax rebate of up to Rs 12,500 against his tax liability, in case his income is limited to Rs 5 lakhs. Once you start earning an income which is over Rs 5 lakhs, you will have to forgo the benefit offered by Section 87A rebate.

The rebate under Section 87A for AY2022-23 is Rs 12,500.

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Rebate under Section 87A: Applicability

The applicability of Section 87A is based on your I-T liability to be calculated. You arrive at this income after factoring in all the deductions offered from Section 80C to Section 80T as part of Chapter VIA, and after setting off any previous loss in income.

What kind of incomes rebate us 87A can be claimed?

  1. Regular income.
  2. Short-term capital gain made on sale of listed equity shares and equity-oriented schemes of mutual funds.
  3. Long-term capital made through sale of capital assets and equity-oriented schemes of mutual funds. Rebate us 87A is not applicable on sale of listed equity shares.

How to claim rebate us 87A in 5 steps?

  1. Write down your gross total income for the financial year.
  2. Factor in deductions offered under Section 80C and 80T and deduct the amount.
  3. Write down your income after tax deductions.
  4. Mention your gross income after tax deductions in your ITR.
  5. Claim a tax rebate us 87A in case your total income is within the Rs 5 lakh-bracket.

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Rebate us 87A: Financial year-wise

Financial year Limit on total taxable income Rebate us 87A
2022-23 Rs 5 lakhs Rs 12,500
2021-22 Rs 5 lakhs Rs 12,500
2020-21 Rs 5 lakhs Rs 12,500
2019-20 Rs 5 lakhs Rs 12,500
2018-19 Rs 3.50 lakhs Rs 2,500
2017-18 Rs 3.50 lakhs Rs 2,500
2016-17 Rs 5 lakhs Rs 5,000
2015-16 Rs 5 lakhs Rs 2,000

FAQs

How is rebate us 87A calculated?

Rebate under Section (us) 87A can be calculated by following the given steps: Calculate your total income for the financial year. Deduct the rebate offered under Section 80C to Section 80T. Deduct any previous loss of income you want to carry forward. Claim 87A rebate if your total income is up to Rs 5 lakhs.

Who is eligible for rebate us 87A?

Resident individuals are eligible to claim rebate under section 87A.

Source: https://ecis2016.org/.
Copyright belongs to: ecis2016.org

Debora Berti

Università degli Studi di Firenze, IT

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