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:
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 income | 6,50,000 |
| Less: Deduction* under section 80C | 1,50,000 |
| Total income | 5,00,000 |
| Income-tax (@ 5% from Rs 2.5 to 5 lakh) | 12,500 |
| Less: Rebate u/s 87A | 12,500 |
| Tax payable | Nil |
*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.
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:
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) |
| 2,70,000 | 1,000 | 1,000 | 0 |
| 3,60,000 | 3,000 | 3,000 | 0 |
| 4,90,000 | 12,000 | 12,000 | 0 |
| 12,00,000 | 1,72,500 | 0 | 1,79,400 |
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:
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) |
| 2,65,000 | 750 | 750 | 0 |
| 2,70,000 | 1,000 | 1,000 | 0 |
| 3,00,000 | 2,500 | 2,500 | 0 |
| 3,50,000 | 5,000 | 2,500 | 2,500+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
| Financial Year | Limit on Total Taxable Income | Amount of rebate allowed u/s 87A |
| 2021-22 | Rs. 5,00,000 | Rs. 12,500 |
| 2020-21 | Rs. 5,00,000 | Rs. 12,500 |
| 2019-20 | Rs. 5,00,000 | Rs. 12,500 |
| 2018-19 | Rs. 3,50,000 | Rs. 2,500 |
| 2017-18 | Rs. 3,50,000 | Rs. 2,500 |
| 2016-17 | Rs. 5,00,000 | Rs. 5,000 |
| 2015-16 | Rs. 5,00,000 | Rs. 2,000 |
| 2014-15 | Rs. 5,00,000 | Rs. 2,000 |
| 2013-14 | Rs. 5,00,000 | Rs. 2,000 |