Section 87A of the Income Tax Act provides a tax rebate for resident individuals with income below a specified threshold. Understanding eligibility, rebate amount, and tax-saving potential is crucial for taxpayers in 2025.

1. What is Section 87A Rebate?

• Offers a rebate on income tax to resident individuals.
• Reduces the tax liability but does not exceed the maximum limit.

2. Eligibility Criteria in 2025

• Must be a resident individual (NRIs not eligible).
• Total taxable income ≤ ₹5,00,000 after deductions under 80C, 80D, etc.

3. Rebate Amount

Note: If tax payable is less than ₹12,500, rebate is limited to actual tax liability.

4. How to Claim Section 87A Rebate

1. Calculate gross total income.
2. Apply deductions under Chapter VI-A (80C, 80D, etc.).
3. Calculate tax on net taxable income using applicable slab.
4. Rebate under Section 87A is automatically applied when filing ITR.

5. Practical Example

6. Tax Planning Tips

• Claim eligible deductions under 80C, 80D, 80E to reduce taxable income below ₹5,00,000.
• Utilize Section 87A to maximize tax savings for low-income earners.
• File ITR on time to ensure automatic rebate application.