The 87a rebate is an income tax relief in India for resident individuals with lower taxable incomes, allowing them to reduce their tax liability to zero if they meet specific income thresholds. It provides a maximum rebate of ₹12,500 for incomes up to ₹5 lakh under the old regime and up to ₹60,000 for incomes up to ₹12 lakh under the new regime.
An individual who is resident in India and whose total income does not exceed Rs. 5,00,000 is entitled to claim rebate under section 87A. Rebate under section 87A is available in the form of deduction from the tax liability. Rebate under section 87A will be lower of 100% of income-tax liability or Rs.
Section 87A is a tax rebate that directly reduces the tax payable, while the standard deduction is a flat amount subtracted from taxable income, simplifying the tax calculation for salaried individuals and pensioners.
The primary objective of this rebate is to reduce the tax burden for low and middle-income earners. It effectively allows eligible taxpayers to pay zero income tax if their net taxable income falls within the specified limit. Only resident individuals are entitled to claim the rebate under Section 87A.
Section 87 A provides tax relief to resident individual falling under lower income brackets. For FY 2025-26, rebate of Rs. 60,000/- is allowed under new regime for an income upto Rs. 12 lakh.
Rebate under Section 87A is available to taxpayers whose income does not exceed: Rs. 12 lakh under the new tax regime and. Rs. 5 lakh under the old regime.
Common Mistakes to Avoid with Section 87A
New tax regime: “The ITR utility does not allow automatic 87A rebate when the total income exceeds Rs 7 lakh includes special rate income like STCG under Section 111A or LTCG under Section 112A. The rebate can only be claimed if the slab-rate income alone is within the Rs 7 lakh limit.
Tax rebates are different from tax refunds, as they are issued at any time during the year and are not related to deductions and credits claimed on a return. Some governments provide incentives in the form of rebates for the purchase of hybrid cars that reduce gasoline consumption.
0.3: Explain the new tax regime? Ans: This tax regime was introduced in budget 2020, offers lower tax rate but without the ability to claim deductions and exemptions except for NPS & EPF contribution. Standard Deduction of INR 75,000 for salaried individuals and pensioners (from FY 2024-25).
Senior citizens above the age of 60 years and below the age of 80 can avail rebate u/s 87A. ISuper senior citizens above the age of 80 years do not hold eligibility to claim rebates u/s 87A. The rebate amount will also be lower than the specified limit under Section 87A or the total taxable income prior to tax.
Yes, people 65 or older get an additional standard deduction, a permanent tax break that increases their standard deduction amount, with specific amounts for single vs. married filers, and even more if blind; plus, for tax years 2025-2028, there's a temporary new senior deduction from the OBBBA, providing up to an extra $6,000 for seniors (eligibility requirements apply).
House Property Loss Under the New Tax Regime
Under the new tax regime, you cannot claim a deduction for housing loan interest on a self-occupied property.
Generally, if you were a U.S. citizen or U.S. resident alien in 2021, you were not a dependent of another taxpayer, and you either have a valid SSN or claim a dependent who has a valid SSN or ATIN, you are eligible to claim the 2021 Recovery Rebate Credit.
It's better to itemize if your total eligible expenses (mortgage interest, state/local taxes up to a limit, charitable donations, medical costs) exceed the Standard Deduction amount for your filing status; otherwise, taking the Standard Deduction is simpler and saves more money. You must choose one method, and the goal is always to reduce your taxable income the most, so compare the totals and pick the larger figure.
A rebate is money returned to a buyer after a purchase, often used as a marketing tool to attract customers. Rebates differ from discounts; rebates are collected post-purchase, whereas discounts are deducted before buying.
For used vehicles, the credit amounts to 30% of the vehicle's price, up to a maximum of $4,000. Unlike a tax deduction, which reduces your taxable income, a tax credit directly reduces your tax bill. For example, if you qualify for the maximum $4,000 credit, it reduces your tax bill by that amount.
Are rebates taxable? In most cases, cash-back rewards and rebates aren't considered taxable income if they're earned from personal purchases. Instead, they're considered discounts. However, rewards from business spending may be treated differently.
Section 87A provides eligible taxpayers with a full income tax rebate if their total income is below Rs 5 lakh under the old tax regime.
If you did not receive a payment
Other reasons why you may not have received a payment or it is delayed: You were not a CCPC at all times during the 2023 or 2024 tax year. Your 2023 corporation income tax return was filed after July 15, 2024. Your 2024 corporation income tax return was filed after July 15, 2025.
Tax rebate eligibility
Generally, federal rebates are based on your tax return information on file with the IRS. Typically, rebates are limited by your income and family size. For example, a taxpayer with adjusted gross income (AGI) at or over a certain amount may be ineligible for a rebate.
The maximum rebate has been increased to ₹60,000 for resident individuals with taxable income up to ₹12,00,000. Due to the standard deduction of ₹75,000 for salaried individuals, the effective no-tax threshold is ₹12,75,000 for salary earners.
Rebate under Section 87A of the Income Tax Act
Due to technical glitches and incorrect assessment, the Section 87A rebate was mistakenly applied to some special-rate incomes. Subsequent corrections led to fresh tax demands, alarming taxpayers who had previously received refunds or lower dues.