Additional Tax rebate of INR 2,000 - Section 87A

Section 87A Introduced in Financial Year 2013-14 , which says

"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. "

Eligibilty to avail the Rebate –

1.      The rebate can be availed only by Resident Individuals .(Not available to HUF/AOP/BOI)

2.      The rebate is not available to Non -resident Individuals

3.      This rebate is also available to senior citizen.

4.      The rebate  is available if Total taxable income is up to or less than Rs. 5,00,000 /-

5.      The Total taxable Income here means Income under all heads(Salary,Income from house property,Income from Business and profession, income from capital gain, Income from other sources) minus all deduction u/s 80C to U.

6.      Negative income from House property (like Interest on house loan for self occupied property) is also to be reduced /considered to get total income.

7.      Deduction u/s 80C to 80U like 80C,80D,80DD,80DDB etc also to be deducted to get total income.

8.      In simple words  Five lakh income limit is to be considered on amount on which Income tax is to be calculated.

9.      The maximum amount of rebate  is Tax due subject to maximum Rs 2000/-

10.  Education Cess & Secondary & Higher education cess is to be calculated after allowing the rebate under section 87A on  balance tax due. 

Calculation of Income tax Rebate of Rs. 2,000/- Section 87A

Sr No	Particulars	Amount
1	Salary Income	750000
2	Income From house property Income(loss)	-50000
3	Income from other source	20000
4	Gross Total Income (1-3)	720000
5	Less :Deduction u/s 80C to 80U
	80C	150000
	80CCG	25000
	80DD	15000
	80DDB	40000
	80TTA	10000
	80U	100000
5	Total deductions	340000
6	Total Income (4-5)	380000
7	Income Tax (on 6-250000)	13000
8	less:Rebate u/s 87A Subject to max 2000/-	2000
9	Net Tax (7-8)	11000
10	Add : Cess( 3 % on 9)	330
11	Total Tax (9+10)	11330

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