An assessee, being an individual resident in India, whose total income does not exceed Rs. 500,000/-, shall be entitled to a deduction, from the amount of income-tax computed on his Taxable Total Income, ie, after Chapter VIA deduction, an amount of income tax computed or Rs. 12,500/-, whichever is less. Previously for AY 2018-19, the rebate was only Rs. 2,500/- which availed by individuals whose total taxable income is less than Rs. 3,50, 000/-. This has reduced the tax burden of an individual drastically. This is one of most beneficial change in provisions of Income tax Ac 1961, for taxpayers whose total income is less than Rs. 5,00,000/-
A brief explanation is given here under for better understanding:
You can claim tax rebate under this provision if you satisfy the following conditions:
- You must be a Resident Individual; and
- Your total Income, less deductions is equal to or less than Rs 5 Lakhs.
The rebate is limited to Rs. 12,500. This means that if the total tax payable is lower than Rs. 12,500, then the whole amount will be the rebate under section 87A. This rebate is applied to the total tax before the Education Cess (4%). Here are the few instances:
Net Taxable Total Income | Tax payable before cess | Rebate u/s 87A | Payable + 4% Cess |
| 2,80,000 | 1,500 | 1,500 | – |
| 3,70,000 | 6,000 | 6,000 | – |
| 5,00,000 | 12,500 | 12,500 | – |
| 5,00,500 | 12,600 | – | 13,104 |
