Section 87A: Tax Rebate For AY 2019-20 and 2020-21

section 87A

Section 87A provides an income tax rebate to a resident individual having prescribed income. This rebate is also available to senior citizens. However, for a Super SeniorSuper Senior Citizen means a person of an age of 80 years or above at any time during a financial year Citizens this deduction becomes irrelevant.

For AY 2019-20 and AY 2020-21, the maximum income tax rebate is Rs.2,500/- and Rs.12,500/- respectively.

It is provided before the calculation of Cess of 4%.

Rebate under section 87A for AY 2019-20

Conditions to be satisfied

Under the following conditions rebate is allowed:

You must be Resident Individual
Total income* is up to Rs.3,50,000/-

If both the above conditions are satisfied, rebate under section 87A will be available.

*Total income is explained at the bottom of this article

Maximum Rebate

Rebate shall be lower of the following:

Income tax before the rebate
2,500

Therefore, the maximum rebate for AY 2019-20 is Rs.2,500/-

Example:

Total Income (AY 2019-20)	Income Tax (A)	Rebate (B)	Cess @ 4% on ( A-B )	Tax Payable (A-B+Cess)
250000	0	0	0	0
270000	1000	1000	0	0
300000 (Maximum income where NO tax is payable)	2500	2500	0	0
350000	5000	2500	100	2,600
350200 (No rebate)	5010	0	200	5210

Rebate under section 87A for AY 2020-21

In Budget 2019:

Tax rebate has been increased to Rs.12,500/-.

Through this amendment, every resident taxpayer having total income* up to Rs. 5 lakh won’t have to pay income tax.

Conditions to be satisfied

Under the following conditions rebate is allowed:

You must be Resident Individual
Total income* is up to Rs.5,00,000/-

If both the above conditions are satisfied, rebate under section 87A will be available.

Maximum Rebate

Rebate shall be lower of the following:

Income tax before the rebate, or
12,500/-

Therefore, the maximum rebate for AY 2020-21 is Rs.12,500/-

Example:

Total Income (AY 2020-21)	Income Tax (A)	Rebate (B)	Cess @ 4% on ( A-B )	Tax Payable (A-B+Cess)
2,50,000	0	0	0	0
3,90,000	7,000	7,000	0	0
5,00,000 (Maximum income where NO tax is payable)	12,500	12,500	0	0
5,01,000 (No rebate)	12,700	0	508	13,208

Total Income *

Total income is the income left after chapter VI-A deduction.

Calculation of total Income	Amount
Income from Salary	xx
Income from House Property [HP]	xx
Income from Business [PGBP]	xx
Capital Gains	xx
Income From Other Sources	xx
Gross Total Income	xxx
Less:
Chapter VI-A
80C-80U	(xx)
Total Income [look for this value]	xxx
Tax Rebate
Tax on total income [as per slap mentioned in notes]	xx
Less:
Rebate of 87A	(xx)
Tax after rebate	xx