There are also many helpful provisions in our tax laws to reduce tax liability. 87A of the Indian Income Tax Act is one such example. Rebate under section 87A provides for a marginally lower payment of tax to individuals earning income below the specified limit. It is being provided to reduce the tax burden of lower income bracket.
Conditions to be satisfied:
Under 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.
Rebate shall be lower of following:
- Income tax before the rebate
Therefore, the maximum rebate for AY 2018-19 is Rs.2,500/-
Only individuals can avail of rebate under Section 87A. It is not available for firms, companies or even Hindu Undivided Family.
Section 87A provides income tax rebate to a resident individual having prescribed income. This rebate is also available to senior citizens but it is not available to Super Senior Citizens.
Budget 2018 didn’t provide any change in rebate for AY 2019-20 (FY 2018-19) i.e maximum rebate will continue to be Rs.2,500 only.
It is provided before the calculation of Cess of 3% or 4% (now).