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New Income Tax Rebate under Section 87A

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Finance Act 2013 has with effect from Assessment Year 2014-15 inserted a new section, namely section 87A.
This newly inserted section provides for a new rebate from income tax up to Rs. two thousand from Assessment Year 2014-15, under section 87A to those resident individuals whose total income does not exceeding Rs. five lakhs
The text of the section is as under:

Rebate of income-tax in case of certain individuals.

87A. An assessee, being an individual resident in India, whose total income does not exceed five hundred thousand rupees, 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 with which he is chargeable for any assessment year, of an amount equal to hundred per cent of such income-tax or an amount of two thousand rupees, whichever is less.

Conditions required to be fulfilled:
Following all the three conditions must be fulfilled for qualifying for the rebate as under:
1. The assessee should be a individual;
The rebate is not available to assessees other than individuals (company, firm etc.)
2. The individual assessee should be resident in India ;
The individual should not be a Non Resident within the meaning of Section 6 >>
3. The total income of the individual assessee should not be more than Rs. five lakhs.
The total income = gross total Income minus deduction under Chapter VIA. Read more >>

Amount of Rebate:
The amount of rebate is the least of the following two:
1. Rs. two Thousand or
2. Amount of income tax on total income (before deductions under Chapter VIA)

As a result, resident individuals (both male or female) having total income up to Rs. 2,20,000/- shall not be required to pay any tax and individuals having total income above Rs. 2.20 lacs but up to Rs. 5 lakh shall get rebate as per above norm.

The following Table illustrate rebate effect on net income tax payable.

Table of Rebate Section 87A
Rebate section 87A for AY 2015-16>>