Income Tax Rebate Section 87A Provisions

Income Tax Rebate Under Section 87A

A rebate under section 87A is one of the income tax provisions that help taxpayers reduce their income tax liability. You can claim an income tax rebate under section 87A if your total income does not exceed Rs 5 lakh in a financial year. Your income tax liability becomes nil after claiming the rebate under section 87A.

Let’s understand the rebate available under section 87A in detail:

Steps to claim a tax rebate under section 87A

  • Calculate your gross total income for the financial year
  • Reduce your tax deductions for tax savings, investments etc.
  • Arrive at your total income after reducing the tax deductions.
  • File an income tax return declaring your gross income and tax deductions.
  • Claim a tax rebate under section 87A if your total income does not exceed Rs 5 lakh.
  • The maximum rebate under section 87A for the AY 2021-22 is Rs 12,500.

An example of the calculation of rebate under section 87A in the case of an individual who is below 60 years of age for AY 2020-21

Source of income (FY 2019-20)Income (Rs)
Gross total income6,50,000
Less: Deduction* under section 80C1,50,000
Total income5,00,000
Income-tax (@ 5% from Rs 2.5 to 5 lakh)12,500
Less: Rebate u/s 87A12,500
Tax payableNil

*You can claim deduction under section 80C for tax-saving, 80D for medical insurance, 80CCD for contribution to NPS, 80G for donations and other deductions to arrive at your total income.

Things to remember to avail rebate under section 87A

  • The rebate can be applied to the total tax before adding the health and education cess of 4%
  • Only resident individuals are eligible to avail rebate under this section. 
  • Senior citizens above 60 years and below 80 years of age can avail of rebate under section 87A 
  • Super senior citizens above 80 years of age are not eligible to claim rebates under section 87A
  • The amount of rebate will be lower than the limit specified under section 87A or total income tax payable (before cess)
  • Section 87A rebate is available under old as well as new tax regimes

Eligibility to claim rebate u/s 87A for FY 2020-21 and FY 2019-20

You can claim the benefit of rebate under section 87A for FY 2020-21 and FY 2019-20, subject to the following conditions are satisfied:

  • You are a resident individual
  • Your total income after reducing the deductions under chapter VI-A (Section 80C, 80D and so on) does not exceed Rs 5 lakh in an FY

The tax rebate is limited to Rs 12,500. This means, if your total tax payable is less than Rs 12,500, then you will not have to pay any tax.
Do note that the rebate will be applied to the total tax before adding the health and education cess of 4%. Here are a few examples of section 87A rebates for resident individuals including senior citizens:  

Total Income (Rs)Tax payable before cess (Rs)Rebate u/s 87A (Rs)Tax Payable + 4% Cess (Rs)
2,70,0001,0001,0000
3,60,0003,0003,0000
4,90,00012,00012,0000
12,00,0001,72,50001,79,400

Eligibility to claim rebate u/s 87A for FY 2018-19 and FY 2017-18

If you are filing income tax returns for FY 2017-18 or FY 2018-19, the eligibility criteria to claim tax rebate under section 87A are as follows:

  • You are a resident individual
  • Your total income after deductions under chapter VI-A (Section 80C, 80D, 80E and so on) is less than Rs 3.5 lakh

The amount of tax rebate is limited to Rs. 2,500. So, if your tax payable does not exceed Rs. 2,500, then you will not have to pay tax.

Do note that the tax rebate will be applied to the total tax before adding the health and education cess of 4% (FY 2018-19) or education cess of 3% (FY 2017-18).


Here are a few examples of section 87A rebates for resident individuals including senior citizens for FY 2017-18 and FY 2018-19:

Total Income (Rs)Tax payable before cess (Rs)Rebate u/s 87A (Rs)Tax Payable + 4% Cess (Rs)
2,65,0007507500
2,70,0001,0001,0000
3,00,0002,5002,5000
3,50,0005,0002,5002,500+cess**

** Tax payable for FY 2017-18 will be Rs. 2575 i.e. Rs. 2500 + 3% cess and
tax payable for FY 2018-19  will be Rs. 2600 i.e. Rs. 2500 + 4% cess

Rebate limit under section 87A for all the Financial years

Financial YearLimit on Total Taxable IncomeAmount of rebate allowed u/s 87A
2021-22Rs. 5,00,000Rs. 12,500
2020-21Rs. 5,00,000Rs. 12,500
2019-20Rs. 5,00,000Rs. 12,500
2018-19Rs. 3,50,000Rs. 2,500
2017-18Rs. 3,50,000Rs. 2,500
2016-17Rs. 5,00,000Rs. 5,000
2015-16Rs. 5,00,000Rs. 2,000
2014-15Rs. 5,00,000Rs. 2,000
2013-14Rs. 5,00,000Rs. 2,000


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Posted By Twinkle
Team TAXAJ

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