Section 87A allows eligible individuals to reduce their tax liability to zero if their income is within specified limits.
Who Can Claim Rebate u/s 87A?
1. Resident Individual
2. Total Income within prescribed limit
3. Not applicable to HUF / Companies
Rebate under Old Tax Regime and New Tax Regime
| Old Regime | New Regime |
|---|---|
| Income up to ₹5,00,000 | Income up to ₹12,00,000 |
| Maximum rebate: ₹12,500 | Maximum rebate: ₹60,000 |
| Tax payable becomes NIL | Tax payable becomes NIL |
Tax payable becomes "Nil"
Income Not Eligible for Rebate
1. Non-resident individuals (NRIs)
2. Income exceeding ₹5,00,000 (Old Regime)
3. Income exceeding ₹12,00,000 (New Regime)
4. Capital gains taxed at special rates (e.g., u/s 111A, 112A)
5. Lottery, betting and gambling income
6. Any income taxed at special rates
Important Condition
1. Rebate is available only if total income does not exceed the limit
2. If income exceeds the limit, rebate is not available
3. Marginal relief may apply in certain cases
Example
| Old Regime | New Regime |
|---|---|
| Income: ₹5,00,000 | Income: ₹12,00,000 |
| Tax calculated: ₹12,500 | Tax calculated: ₹60,000 |
| Rebate u/s 87A: ₹12,500 | Tax calculated: ₹60,000 |
| Final Tax: Nil | Nil |
Pro Tip
Plan your income to stay within ₹12 lakh under new regime to legally pay zero tax.
Not sure how to use rebate properly?
MeraFinanceWala can help you reduce your tax legally!
