Introduction
Rebate u/s 87A is a provision in the Income Tax Act that provides a tax relief to individual taxpayers. It was introduced in the Finance Act, 2013, and has been in effect since the assessment year 2014-15. This rebate is available to individuals who satisfy certain conditions and is aimed at providing tax relief to taxpayers with lower income levels. In this blog, we will discuss Rebate u/s 87A for FY 2023-24.
Rebate u/s 87A for FY 2021-22, 2022-23, and 2023-24 (AY 2022-23, 2023-24, and 2024-25):
Under both the old and new income tax regimes, the amount of the refund under Section 87A for FY 2021-22 2022-23 [(AY (2022-23) (2023-24)] has remained unchanged. A resident individual with taxable income up to Rs 5,00,000 will be eligible for a tax rebate of Rs 12,500, or the amount of tax payable (whichever is lower). Under the new income tax regime, the amount of the rebate under Section 87A for FY 2023-24 (AY 2024-25) has been modified. A resident individual with taxable income up to Rs 7,00,000 will receive a Rs 25,000 tax relief. The former tax regime remains the same, i.e. 12,500 for income up to Rs 5,000,000 then the entire amount of tax payable will be treated as a rebate and will be refunded to the taxpayer.
It is important to note that the rebate is applicable only to individuals and not to HUFs, firms, or other types of taxpayers. The rebate is also not applicable to non-resident individuals.
How much is the rebate allowed u/s 87A?
If an individual’s total taxable income is up to Rs.7 lakh, they will be eligible for the following tax breaks under the new tax regime for the fiscal year 2023-24:
- 25,000 or the applicable tax (whichever is lower).
- It is the same as earlier Rs.12,500 under the prior tax structure.
If the above conditions are satisfied, the taxpayer can claim a rebate under Section 87A in their Income Tax Return.
Calculation of Rebate u/s 87A:
The amount of rebate available under Section 87A is calculated as follows:
| Source of income | Income (Rs) (FY 2023-24) Old Regime | Income (Rs) (FY 2022-23) New Regime | Income (Rs) (FY 2023-24) New Regime |
| Gross total income | 7,00,000.00 | 5,00,000.00 | 7,50,000.00 |
| Less: Deduction* under section 80C | 1,50,000.00 | Not Eligible | Not Eligible |
| Standard Deduction | 50,000.00 | Not Eligible | 50,000.00 |
| Total income | 5,00,000.00 | 5,00,000.00 | 7,00,000.00 |
| Income-tax | 12,500.00 | 12,500.00 | 25,000.00 |
| Less: Rebate u/s 87A | 12,500.00 | 12,500.00 | 25,000.00 |
| Tax payable | Nil | Nil | Nil |
Conclusion:
Rebate u/s 87A for FY 2023-24 is a beneficial provision for individual taxpayers with lower income levels. The maximum amount of rebate available under this section is Rs. 12,500 for old regime and Rs. 25000 for New Regime which can help reduce the tax burden on taxpayers. However, it is important to note that the rebate is subject to certain conditions, and taxpayers must ensure that they meet these conditions before claiming the rebate. As always, it is advisable to seek the guidance of a tax professional for any queries related to income tax laws and regulations. PulseHRM is always available to assist you with any tax-related matters.
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