The government of India offers various tax-saving provisions to support citizens’ financial well-being. Section 87A of the Income Tax Act, of 1961, is one such initiative that helps individuals save on income tax, aiming to reduce the burden for taxpayers in the lower-income category. Here, we’ll delve into the details of Section 87A, including eligibility, the rebate amount, how to claim it, and key considerations.
Section 87A allows individuals with annual incomes up to ₹5 lakhs to claim a tax rebate, providing them significant relief. This provision is especially valuable for taxpayers in the 10% tax bracket, allowing for a rebate of up to ₹12,500 on their payable income tax. This rebate essentially nullifies the tax liability for eligible individuals with income within this range, encouraging financial stability.
The maximum rebate an individual can claim under Section 87 is ₹12,500. The rebate amount applies to income tax before adding any education or health cess. The lower rebate amount between the payable tax and ₹12,500 will be deducted from the tax payable.
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Follow these steps to claim the tax rebate under Section 87:
To avail of the rebate under Section 87A, an individual must meet the following requirements:
For the fiscal years 2023-24 and 2024-25, individuals meeting these criteria can claim a rebate of up to ₹12,500. Below is an example:
| Annual Income | Tax Amount Before Rebate | Maximum Rebate | Tax After Rebate |
| ₹3,00,000 | ₹2,500 | ₹2,500 | ₹0 |
| ₹3,10,000 | ₹3,000 | ₹2,500 | ₹500 |
| ₹3,50,000 | ₹5,000 | ₹2,500 | ₹2,500 |
These examples help illustrate the rebate application at various income levels, ensuring taxpayers understand its benefits.
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Section 87A provides crucial tax relief for individual taxpayers with an annual income of up to ₹5 lakh, encouraging greater tax compliance. It allows eligible individuals, including senior citizens up to 79 years, to claim a tax rebate that reduces their liability, fostering a more equitable tax system. By following the correct steps and considering eligibility, taxpayers can benefit from the rebate and minimize their tax burden.
Section 87A is a provision in the Income Tax Act, 1961, that allows individual taxpayers with an annual income of up to ₹5 lakh to claim a tax rebate, reducing their tax liability by up to ₹12,500.
Only individual taxpayers who are residents of India and have a net taxable income of up to ₹5 lakh are eligible. The rebate is not available for HUFs, companies, or partnership firms.
Yes, individuals aged 60-79 years can claim this rebate. However, super senior citizens (80 years and above) are not eligible.
No, this rebate is only available for resident individuals of India. Non-resident individuals do not qualify for the Section 87A rebate.
The rebate applies to the total income tax payable before adding cess, irrespective of the type of income earned.
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