Income Tax

Are You Eligible For Income Tax Rebate U/S 87A

section-87A-new-tax-credit-rs-2000In budget 2013-14, taxpayers’ focus was on Section 87A. This section is added in Income Tax act 1961 for the benefit of common man. Section 87A states that taxpayer with an income of less than 5 lakhs will be eligible to get a tax rebate of Rs. 2,000.

Please understand clearly, it is a tax rebate and not an exemption.

It will be available to individual assessee falling under category of general and senior citizen only. No HUF will receive this rebate.

How To Calculate Tax Rebate U/S 87A?

This tax rebate will be available to those whose income is less than Rs. 5 lakhs and fall under the above-mentioned category. Here income means gross income minus deductions under section VI. If your net income is below Rs. 5 Lakh, you will receive a relief of Rs. 2,000 in your total tax payments.


Suppose you are a general citizen with a salary Rs. 5 Lakhs. You get deductions of Rs. 50000 under Sec VI. Hence, now net income is Rs. 4,50,000 that means you are liable to receive this rebate. Your actual tax payment for FY 2013-14 for the above income will be as under.

Tax plus 3% surcharge = Rs. 25,750

Tax payable after rebate = Rs. 23,750

You don’t need to do any procedure for this. Your rebate will be deducted when you file your returns.

Section VI

There are many deductions available to individuals under Section VI. It includes investments and certain expenses.



Deduction for individuals

Deductions for senior citizens


–          Life insurance

–          Equity linked saving scheme

–          FDs with tax saving

–          Employee Provident fund and VPF

–          Public Provident fund

–          National saving certificate

Not exceed Rs. 1,00,000 in total

Not exceed Rs. 1,00,000 in total


–          Pension plan from insurance companies


–          Contribution for Pension plan by Central Government employees


–          Medical insurance premium (family members included)

Max Rs. 15,000

Max Rs. 20,000

–          Additional for parents

Max Rs. 30,000

Max Rs. 40,000


Medical treatment for dependent with disability

–         If disability more than 80%

Max Rs. 1,00,000

Max Rs. 1,00,000

–         For others

Max Rs. 50,000

Max Rs. 50,000


Medical treatment of specified disease (dependent relative included)

Max Rs. 40,000

Max Rs. 60,000


Interest on Education loan

Entire interest

Entire interest






Donation for Scientific and rural development




Donation to Political parties




Rents paid in absence of HRA





–         More than 80%

Rs. 1,00,000

Rs. 1,00,000

–         others

Rs. 50,000

Rs. 50,000

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