Section 87a of the Income Tax Act, 1961 was launched to offer some relief for taxpayers who fall under the 10% tax slab. Any individual whose total net income does not cross Rs.5 lakh can claim tax rebate under section 87a of the Income Tax Act, 1961. One can get a tax rebate of up to Rs.2000 under the section 87a. The amount of rebate will be 100% of income tax or Rs.2,000 whichever is lesser.
The rebate under section 87a is available only to individual assessee and not to members of Hindu United Families, AOP/BOI, Firm and Company. Also, the aggregate amount of rebate should not exceed the amount of income tax computed before the rebate on total income of the individual with which they are chargeable for that assessment year.
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.
- Amended section 87a is applicable from 1st April of that financial year, it is applicable to the assessment year and its subsequent assessment years
- Only Indian residents can avail the rebate
- NRIs are not eligible for the rebate
- Both male and female assesses are eligible for the rebate
- Rebate benefit is not available to super senior citizens
- Rebate is restricted to ‘total tax payable’ if the total tax payable is less than Rs.2,000
How to Claim Refund under Section 87a of the Income Tax Act, 1961?
One can claim their refund under Section 87a of the Income Tax Act, 1961 only if their income is less than Rs.5 lakh and their tax liability is more than Rs.2000. The rebate can be claimed while filing the tax return just before adding education cess, secondary and higher education cess.
