Section 87A: Income Tax Rebate Under Section 87A for FY 2019-20

Last Updated at: Nov 10, 2020
Income tax rebate under Section 87A for Fy 2019-20
In the interim budget 2019, a big relief was provided to the taxpayers who were earning less than Rs 5 lakh. Even without modifying income tax slabs, the provision of rebates helped them to pay zero tax. The Budget raised the limit available under section 87A of the Income Tax Act to Rs 5 lakh and capped it at a maximum rebate of Rs 12,500. 


Income tax is not the easiest subject to fully comprehend. Hence, we often find that people get stressed out while handling their tax issues, and the tax season is a difficult one to get through for many. If you are one such person, rest assured that there are many like you. While tax experts and consultants can help you with filing your taxes, it is always better if you understand what’s happening in the first place. That way, you gain some useful insight and also, later on, you can file your IT returns with the help of Vakilsearch’s expert guidance helping to save a tonne of money.

Income Tax Rebate

Income tax rebate helps you calculate your tax according to your income bracket and is something you should know. As per Section 87A of the IT Act, these are the things you need to keep in mind:

  • The refund option is available on to Indian residents. To avail this benefit, you must have both a valid Aadhaar card and a birth certificate to prove your Indian citizenship. Non-resident Indians are not allowed to apply for this rebate as of now.
  • The rebate is applicable only for certain individuals whose income falls under a particular bracket. The income must not exceed Rs 3,50,000, to be eligible to claim the rebate. This discount is capped at Rs 2,500 prior to calculating and adding the Education Cess, which stands at 4%.
  • However, if the individual’s taxable income falls between Rs. 3,50,000 and Rs. 5,00,000, a maximum rebate of Rs 5000 may be claimed.
    • This benefit cannot be availed by senior citizens (individuals who are above 60 years in age). Senior citizens may not file for a tax rebate. But this new year brings good news as the IT department has increased the exemption limit for the payment of tax for such senior citizens from 10,000 to 50,000 from 2018-2019.
    • Only individuals may apply for a rebate, and this law excludes Hindu Undivided Families (HUF), firms and corporations from applying for this tax rebate.
    • Complete tax rebate applies to taxpayers whose annual income does not exceed Rs.5 lakh. The income limit was raised to Rs.5 lakh from the previously accepted Rs 3.5 lakh.
    • The new budget was also responsible for increasing the tax rebate to Rs. 12500 from the earlier sum of Rs.2,500.

E-file Your Income Tax Returns

The interim financial budget for the fiscal year 2019-20 made headlines as it introduced a full tax rebate by amending and adding onto section 87A. You can claim this rebate while you file your IT return. If your tax gets deducted as TDS, you can claim this deduction or discount while filing your returns. Individuals are allowed to file returns on or before 31st July of each year. The financial year lies between 1st April and 31st March. This system allows each Indian a period of four months to file their income tax returns.  

As per the maiden budget of the newly re-elected government for FY 2019-20, “No income tax return filing for income up to Rs 5 lakh/year.”

Avoiding to pay taxes is a severe crime that if caught, will be punished through hefty fines and imprisonment. Hence, it is advisable to be educated about tax laws and use this knowledge to file their due returns. Stay updated on new rules and amendments as the exemption limits change every two to three years. Make sure you keep your eyes and ears open for such developments to stay in the loop and be responsible, tax-paying citizens.