Who can claim benefits under section 87A?

What is the income limit for section 87A rebate?

This effectively makes a net taxable income of up to ₹12,00,000 completely tax-free. In the old tax regime, the maximum rebate under Section 87A remains strictly capped at ₹12,500. This rebate is available only if your net taxable income does not exceed the ₹5,00,000 threshold.

How to use 87A rebate?

How to claim tax rebate under section 87A?

1. Step 1: Calculate your gross total income for the previous financial year.
2. Step 2: Deduct all tax-saving investments and deductions claimed from the gross total income.

What is the difference between 87A and standard deduction?

If a taxpayer's taxable income, after applying the standard deduction, is up to ₹12 lakh, they are eligible for a Section 87A rebate of up to ₹60,000. For example, a salaried individual earning ₹12 lakh per year will first deduct ₹75,000 as the standard deduction. This brings the taxable income down to ₹11.25 lakh.

Why is 87A not applicable?

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.

What is the difference between 87A and 80C?

Section 80C offers deductions for specific investments and expenses, while Section 87A provides a rebate on your final tax liability if your total income is within the eligible limit. Claim 80C first to reduce taxable income, then apply the 87A rebate.

Is 87A applicable for senior citizens?

Key Points to Know Before Claiming 87A Rebate

Resident Individuals: Only resident individuals are eligible to claim the rebate. Senior Citizens: Individuals aged 60 to 79 years can avail themselves of the rebate. Super Senior Citizens: Individuals aged 80 years and above are not eligible for this rebate.

What are common reasons for rebate disallowance?

While the reason your claim was disallowed are specific to your claim one of the more common reasons is the IRS determined the claim was not timely filed.

What is Section 87A capital gains disparity?

Section 87A disparity: A salaried middle-class individual earning below ₹12 lakh but also earning capital gains from equity-oriented mutual funds ends up paying tax at 12.5% or 20% on such gains, with no benefit of the ₹60,000 rebate.

Who is not eligible for a rebate?

HUFs, NRIs, companies, and super senior citizens cannot claim rebate under section 87A. Who is eligible to claim for 87A rebate under LTCG? If you have long-term capital gains (LTCG) from the sale of listed equity shares or mutual funds, you cannot claim a rebate under section 87A tax rebate for that income.

What is the difference between a tax refund and rebate?

Tax rebates are a way for governments to stimulate the economy by getting cash into consumers' hands quickly. 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.

What is a 75000 rebate in the new tax regime?

75,000, then no tax is payable on income up to Rs. 12.75 lakh. This increase reduces the tax liability for middle-income earners under the new regime.

Who is eligible for an 87A rebate?

Rebate u/s 87A for FY 2024-25 (AY 2025-26) For the Financial Year 2024-25 (Assessment Year 2025-26), the provisions of Section 87A have been structured as follows: Old tax regime: People with a taxable income up to Rs 5,00,000 qualify for a rebate of up to Rs 12,500.

Is Section 87A tax rebate for Ltcg?

The Section 87A tax rebate has sparked quite a debate, especially among those with long term capital gains (LTCG) from equity or debt mutual funds. The Budget 2025 clearly stated that the Section 87A tax rebate is off the table for LTCG on equity mutual funds, but it didn't apply this in retrospective cases.

Is rebate allowed on special rate income?

“Further, as mentioned above, such rebate of income-tax is not available on tax on incomes chargeable at special rates (for e.g.: capital gains u/s 111A, 112 etc.)." Kansal Bhimanshu says: “Interestingly, the language of the law is principally the same for AY 2025-26 and AY 2026-27.

What exemptions are allowed in the new tax regime?

For FY 2026-27 (AY 2026-27), the new tax regime, as per the Union Budget 2025 and 2026, provides a basic exemption limit of ₹4 lakh and allows a rebate under Section 87A for incomes up to ₹12 lakh. While it eliminates most deductions (like 80C, 80D, HRA), it permits a standard deduction of ₹75,000 for salaried employees.

What is the 60% trap?

The 60% tax trap is a quirk in the UK income tax system that affects high earners, creating an effective marginal tax rate of 60% on a specific slice of their income.

Who is eligible for tax rebates?

To claim the full credit, a taxpayer's income must be $80,000 or less ($160,000 or less for married filing jointly). The credit phases out entirely for taxpayers with income over $90,000 ($180,000 for joint filers).

How do I claim the section 87A rebate?

As a taxpayer, you don't have to claim the rebate under section 87A. If your total taxable income is below the specified threshold limit, the rebate is automatically applied when you file your tax return on the income tax portal.

Is it better to itemize or take standard deduction?

It is better to choose whichever deduction results in the larger subtraction from your taxable income. Use the IRS Interactive Tax Assistant or tax software to easily run your numbers both ways to see which method generates the biggest refund or lowest tax liability.

How to claim rebate under section 87A in ITR 2?

The rebate under Section 87A the employee must meet the following criteria:

1. Must be a resident individual as per the Income Tax Act.
2. The total taxable income after all deductions and exemptions, must not exceed the prescribed limit. For FY: 2025-26 it is ₹12,500 under Old Regime and ₹60,000 under New Regime.