Complete Guide on Rebate under Section 87A to Individuals

Confused in complicated laws? Take our GST consultation services to get your issues solved from GST experts. Click here to know more.

Eligible Person

Rebate under Section 87A is allowed only to individuals resident in India whose total taxable income is below the specified limits. Please note that the word is taxable income, so it is after all deductions such as 80C, 80D etc.

The specified limits are

Financial Year Taxable Income Limit
2018-19 Rs. 3,50,000
2019-20 Rs. 5,00,000

Companies, firms or Hindu Undivided Family cannot claim this rebate.

Eligible Amount

Rebate under section 87A is allowed from tax payable before levy of Education cess, secondary and higher education cess & Surcharge.  The amount of rebate is 100% income tax liability subject to maximum limits as under

Financial Year Maximum Rebate Limit
2018-19 Rs. 2,500
2019-20 Rs. 12,500

The education cess will apply on taxable income after deduction of this rebate.

Therefore, no income tax is payable by individuals whose taxable income is less than Rs. 5 lakh in FY 2019-20. And when the income exceeds Rs. 5 lakh then tax is payable as per income tax slabs so tax on taxable income of Rs. 5,01,000 comes to Rs. 12,700 excluding cess.

Also note that if income tax is payable on special rates (for example 15% for share trading profit) then there will be net tax payable even if the income is below Rs. 5 lakh in FY 2019-20.

Relief under section 87A will be calculated automatically if you are filing income tax return through excel or java utility.

Why exemption limit is not increased rather than giving rebate

If the government increases the exemption limit then it will result in a decrease in income tax for all individuals including individuals who has income in crores. The government only wants to decrease taxes for persons who fall in a lower income bracket. Therefore, rebate under section 87A is introduced to lower the tax for individuals with low income without decreasing tax for persons with higher income.

Bare Act for Section 87A –

Confused about complicated laws? Take our GST consultation services to get your issues solved from GST experts. Click here to know more.

Read More Articles

Section 44ADA – Presumptive Taxation Scheme for Professionals

From financial year 2016-17, a new Section 44ADA is introduced for presumptive income for professionals. This section is similar to section 44AD for traders. Under this section professionals such as legal, medical, engineering, architect, accountancy, technical consultancy, interior decoration or any

Read Article »

Registration Under GST

Topic Covered in this Article Persons required to register compulsorily Documents Required for Registration Fees for Registration Voluntary Registration Time Limit for Registration Effective Date of Registration Requirements for Registration Can a person take more than one GSTIN Things that

Read Article »

GST on Import

Article 269A of constitution mandates that import of goods or services in India is considered as Inter-state trade. Therefore, import of goods or services is considered as interstate supply and is liable for payment of IGST. IGST on the import

Read Article »

Table of Contents


We will send updates relating to GST only

(No spam, you can unsubscribe anytime)