Rebate u/s 87A - Resident Individuals whose total income does not exceed ₹5 Lakh - Income Tax - Ready Reckoner - Income Tax

Rebate of Income Tax in case of certain Individuals - Section 87A Where the total income of the assessee is chargeable to tax Under Old Regime Rebate U/s. 87A is available to Resident Individuals. The specified limits are. Where Total Income does not exceed Amount of Rebate Rs. 5 Lakh Rs. 12,500 or Amount of tax on such income, whichever is less Where the total income of the assessee is chargeable to tax Under New Regime w.e.f. from 01 st April 2024; Where the total income of the assessee is chargeable to tax under section 115BAC(1A) , and the total income - (a) the total income does not exceed 7,00,000/- rupees , the assessee shall be entitled to a deduction from the amount of income-tax (as computed before allowing for the deductions under this Chapter) on his total income with which he is chargeable for any assessment year, of an amount equal to one hundred per cent. of such income-tax or an amount of Rs. 25,000/- , whichever is less; (b) total income exceeds 7,00,000/- rupees and the income-tax payable on such total income exceeds the amount by which the total income is in excess of 7,00,000/- rupees the assessee shall be entitled to a deduction from the amount of income-tax (as computed before allowing the deductions under this Chapter) on his total income, of an amount equal to the amount by which the income-tax payable on such total income is in excess of the amount by which the total income exceeds 7,00,000/- rupees. In other words Step 1 - Total Income (-) Rs. 7 lakhs (A) Step 2 - Compute income tax liability on total income (B) Step 3 - if B A, rebate u/s 87A would be a B-A. The amount of rebate u/s 87A shall be exceed the amount of income tax (as computed before allowing such rebate) on the total income of the assessee. Rebate is available only to Resident Individuals and not available to Non Residents Rebate is allowed before levy of Health Education Cess Surcharge. This rebate shall be subtracted from the Total Tax payable and not from the total Income of an Individual. This rebate is available to all head of income (i.e whether it is special rate of tax income or not ) Example:- Particular Situation 1 Rs. Situation 2 Rs. Situation 3 Rs. Net Income (A) 7,27,000 7,30,000 7,50,000 Tax on net income under alternative tax regime (B) 27,700 28,000 30,000 Less:- Amount Deductible as per proviso (b) to section 87A - Excess of Rs. 7,00,000 - Rebate u/s 87A (B-C) (C) 27,000 30,000 50,000 (D) 700 - - Income tax after rebate u/s 87A (B-D) (E) 27,000 28,000 30,000 Add:- Health and Education Cess 4% (F) 1,080 1,120 1,200 Total Tax payable (E+F) (G) 28,080 29,120 31,200 Amended vide Section 20 of the Finance Act, 2025 W.e.f. 01.04.2026 Where the total income of the assessee is chargeable to tax under section 115BAC(1A) , and the total income - (a) the total income does not exceed Rs. 12,00,000/- , the assessee shall be entitled to a deduction from the amount of income-tax (as computed before allowing for the deductions under this Chapter) on his total income with which he is chargeable for any assessment year, of an amount equal to one hundred per cent. of such income-tax or an amount of Rs. 60,000/- , whichever is less; (b) total income exceeds Rs. 12,00,000/- and the income-tax payable on such total income exceeds the amount by which the total income is in excess of Rs. 12,00,000/- the assessee shall be entitled to a deduction from the amount of income-tax (as computed before allowing the deductions under this Chapter) on his total income, of an amount equal to the amount by which the income-tax payable on such total income is in excess of the amount by which the total income exceeds Rs. 12,00,000/-. In other words Step 1 - Total Income (-) Rs. 12 lakhs (A) Step 2 - Compute income tax liability on total income (B) Step 3 - if B A, rebate u/s 87A would be a B-A. The amount of rebate u/s 87A shall be exceed the amount of income tax (as computed before allowing such rebate) on the total income of the assessee. The deduction under the first proviso, shall not exceed the amount of income-tax payable as per the rates provided in section 115BAC(1A). Rebate is available only to Resident Individuals and not available to Non Residents Rebate is allowed before levy of Health Education Cess Surcharge. This rebate shall be subtracted from the Total Tax payable and not from the total Income of an Individual. This rebate is available to all head of income (i.e. whether it is special rate of tax income or not)