A rebate under section 87A is one of the income tax provisions that help low income earning taxpayers reduce their income tax liability. Taxpayers earning an income below a certain limit have the benefit of paying marginally lower taxes. A Taxpayer can claim the benefit of rebate under section 87A for FY 2022-23 and 2023-24 only if the following conditions are satisfied:
- You are a resident individual
- Your total income after reducing the deductions under chapter VI-A (Section 80C, 80D and so on) does not exceed Rs 5 lakh in an FY.
The tax rebate is limited to Rs 12,500. This means, if your total tax payable is less than Rs 12,500, then you will not have to pay any tax. However, if you opt for the new regime from FY 2023-24, the rebate threshold has been increased to Rs 7 lakh.
Do note that the rebate will be applied to the total tax before adding the health and education cess of 4%.