Understanding Section 87A: Income Tax Rebate for Individuals

Learn about Section 87A in income tax and how it benefits low-income earners with rebates.

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Section 87A in income tax provides a rebate for resident individuals if their total income does not exceed a specified threshold, aimed at reducing overall tax liability. For the financial year 2020-21, individuals earning up to INR 5 lakh are eligible for a rebate of up to INR 12,500, effectively reducing their payable tax to zero. This benefit ensures that low-income earners get some relief on their income tax.

FAQs & Answers

  1. What is Section 87A in income tax? Section 87A provides a tax rebate for resident individuals whose total income does not exceed a specific threshold, which aimed to reduce their tax liability.
  2. Who is eligible for the 87A tax rebate? Individuals earning up to INR 5 lakh for the financial year 2020-21 are eligible for a rebate of up to INR 12,500 under Section 87A.
  3. How does the 87A rebate affect tax payments? The rebate under Section 87A can effectively reduce the income tax payable to zero for eligible individuals, providing relief to low-income earners.
  4. What financial year does the 87A rebate apply to? For the financial year 2020-21, the 87A rebate applies to resident individuals earning up to INR 5 lakh.

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