Section 87A of the Income Tax Act (ITA), 1961, provides an opportunity for taxpayers to receive a rebate on their income tax liability. It's important to understand the details of this section in order to make the most of the tax benefits available. Let’s look closely at Section 87A and what’s in it for you.
87A in Income Tax
Section 87A of the ITA provides a rebate on your tax liability. To be eligible for a rebate under Section 87A, your taxable income (after taking deductions into account) must fall below a threshold. The threshold for 87 A rebate varies depending on the tax system you opt for:
- Under the old tax regime: If your income is up to INR 5 lakh, you can receive a deduction of INR 12,500.
- Under the new tax regime: If your income is up to INR 7 lakh, you can receive a rebate of INR 25,000.
Do note that NRIs (Non-Resident Indians), HUFs (Hindu Undivided Families), and firms are ineligible for a tax rebate under Section 87A of the ITA.