Filing taxes might not be everyone’s idea of fun, but there’s some good news for those who earn less than a certain amount—Section 87A has got your back! Imagine getting a discount on your tax bill, just because your income falls within a specific range. Sounds great, doesn’t it? That’s exactly what the income tax rebate under Section 87A does. It’s like the government giving you a tax break for being a responsible taxpayer.
If you’ve ever wondered how you can save more money while filing your taxes, this rebate could be the magic ingredient that lowers your tax burden and puts more cash in your pocket. In this blog, we’ll break down what Section 87A is all about, who can claim it, and how it benefits you. Let’s dive right in!
Rebate u/s 87A for FY 2024-25 (AY 2025-26)
The income tax rebate under Section 87A is available to individuals whose net taxable income does not exceed ₹ 7 lakh for the financial year 2024-25 (assessment year 2025-26). If your income is within this limit, you are eligible to claim a rebate of up to ₹ 25,000, which means your tax liability could effectively become zero. This is great news for many taxpayers, as it means you may not have to pay any income tax if your income falls within the prescribed threshold.
For example, if Ravi earns ₹ 6,50,000 annually, he can claim the rebate under Section 87A. After applying eligible deductions, let’s say his taxable income comes down to ₹ 6,90,000. In this case, Ravi can claim the rebate of ₹ 25,000, reducing his overall tax liability to zero. It’s like getting a special discount on your taxes just for earning below a certain limit!
The rebate under Section 87A is available under both the old and new tax regimes, which gives taxpayers the flexibility to choose the regime that suits them best while still benefiting from this rebate. This makes it especially valuable for individuals who may not have many deductions but still want to take advantage of reduced tax liability.
Steps to Claim a Tax Rebate Under Section 87A
Claiming the tax rebate under Section 87A is straightforward. Here are the steps you need to follow:
- Calculate Your Total Income: Start by calculating your total income from all sources, including salary, interest, rental income, and any other earnings.
- Apply Deductions: Deduct eligible amounts under various sections like Section 80C, 80D, etc., to determine your net taxable income. Make sure your net taxable income does not exceed ₹ 7 lakh to qualify for the rebate.
- Determine Tax Payable: Calculate your tax payable based on the applicable tax slab rate.
- Apply Rebate Under Section 87A: If your net taxable income is ₹ 7 lakh or less, apply the rebate under Section 87A. The maximum rebate you can claim is ₹ 25,000, which will reduce your tax liability accordingly.
- Verify Through Form 16/Form 26AS: Ensure that the rebate has been properly accounted for in your Form 16 (if you are salaried) or Form 26AS. This will help confirm that your tax liability is correctly calculated.
- File Your ITR: Finally, file your Income Tax Return (ITR) with the correct details, ensuring the rebate has been applied accurately.
Things to Remember while Availing Rebate under Section 87A
While claiming the rebate under Section 87A, keep the following points in mind:
- Income Limit: The rebate is only available if your net taxable income is ₹ 7 lakh or less. If your income exceeds this limit, you cannot claim the rebate.
- Applicable for Residents: The rebate is available only to resident individuals. Non-resident Indians (NRIs) are not eligible for the rebate under Section 87A.
- Maximum Rebate: The maximum rebate allowed under Section 87A is ₹ 25,000. This means that even if your calculated tax liability is higher, the rebate will be capped at ₹ 25,000.
- Available Under Both Regimes: The rebate is available under both the old and new tax regimes, which means you can benefit from it irrespective of the tax regime you choose.
- Not Applicable for HUFs or Firms: The rebate is only for individual taxpayers. It cannot be claimed by Hindu Undivided Families (HUFs), firms, or any other entities.
- No Additional Documents Needed: You do not need to submit any additional documents to claim this rebate. Just ensure that your net taxable income falls within the specified limit, and the rebate will automatically be applied when calculating your tax liability.
Eligibility to Claim Rebate u/s 87A
To claim the rebate under Section 87A, you must meet the following eligibility criteria:
- Resident Individuals: The rebate is only available to resident individuals. Non-resident Indians (NRIs) are not eligible for this rebate.
- Income Limit: Your net taxable income should not exceed ₹ 7 lakh for the financial year 2024-25. If your income is higher than this limit, you cannot claim the rebate.
- Individual Taxpayer: Only individual taxpayers are eligible for this rebate. It is not applicable to Hindu Undivided Families (HUFs), firms, or companies.
- Age Criteria: There is no age limit for claiming the rebate under Section 87A. Both young earners and senior citizens can avail of this rebate if they meet the income criteria.
Rebate Limit Under Section 87A for All the Financial Years
| Financial Year | Limit on total taxable Income | Amount of rebate allowed u/s 87A |
| 2023-24 | Rs. 7,00,000 (under New tax regime) | Rs. 25,000 |
| 2023-24 | Rs. 5,00,000 (under Old tax regime) | Rs.12,500 |
| 2022-23 | Rs. 5,00,000 | Rs. 12,500 |
| 2021-22 | Rs. 5,00,000 | Rs. 12,500 |
| 2020-21 | Rs. 5,00,000 | Rs. 12,500 |
| 2019-20 | Rs. 5,00,000 | Rs. 12,500 |
| 2018-19 | Rs. 3,50,000 | Rs. 2,500 |
| 2017-18 | Rs. 3,50,000 | Rs. 2,500 |
| 2016-17 | Rs. 5,00,000 | Rs. 5,000 |
| 2015-16 | Rs. 5,00,000 | Rs. 2,000 |
| 2014-15 | Rs. 5,00,000 | Rs. 2,000 |
| 2013-14 | Rs. 5,00,000 | Rs. 2,000 |
Conclusion
The income tax rebate under Section 87A is a fantastic opportunity for individuals with a net taxable income of up to ₹ 7 lakh to reduce their tax liability significantly. It’s an easy and hassle-free way to save money on your taxes, and it is available under both the old and new tax regimes. By understanding how to claim this rebate, you can make sure you’re taking full advantage of the benefits available to you as a taxpayer. To learn more about tax-saving strategies and make wise financial decisions, visit Paisaseekho for helpful guides and tips.
FAQs
- What is the income limit to claim the rebate under Section 87A?
The income limit to claim the rebate under Section 87A is ₹ 7 lakh for the financial year 2024-25.
- How much rebate can I get under Section 87A?
You can claim a rebate of up to ₹ 25,000 under Section 87A, which can bring your tax liability to zero if your income is within the specified limit.
- Is the rebate under Section 87A available under both tax regimes?
Yes, the rebate under Section 87A is available under both the old and new tax regimes.
- Can NRIs claim the rebate under Section 87A?
No, Non-resident Indians (NRIs) are not eligible to claim the rebate under Section 87A. It is only available to resident individuals.
- Do I need to submit any documents to claim the rebate under Section 87A?
No, you do not need to submit any additional documents. The rebate is applied automatically when calculating your tax liability if you meet the eligibility criteria.
- Is the rebate available for senior citizens?
Yes, the rebate under Section 87A is available to all resident individuals, including senior citizens, provided their net taxable income does not exceed ₹ 7 lakh.
- Can HUFs or firms claim the rebate under Section 87A?
No, the rebate under Section 87A is only available to individual taxpayers. HUFs, firms, and companies are not eligible.
- How does the rebate under Section 87A affect my tax liability?
The rebate under Section 87A reduces your tax liability by up to ₹ 25,000 if your net taxable income is ₹ 7 lakh or less, potentially bringing your tax liability to zero.
- Can I claim the rebate if my income is slightly above ₹ 7 lakh?
No, if your net taxable income exceeds ₹ 7 lakh, even by a small amount, you are not eligible for the rebate under Section 87A.
- What should I do if the rebate is not reflected in my Form 16?
If the rebate is not reflected in your Form 16, verify your net taxable income and ensure it is within the eligible limit. You can also consult with your employer or a tax professional to rectify any discrepancies.
