## Rebate to Resident Individual [Section 87A] — Old Regime
### Eligibility
Available only to a Resident Individual (not HUF, not Non-Resident).
Only if Total Income does not exceed ₹ 5,00,000.
### Quantum of Rebate
Rebate = Lower of:
₹ 12,500, OR
Actual tax amount (before cess)
### Order of Application
Rebate is to be given before adding Health & Education Cess.
### Key Points
If Total Income is even ₹1 above ₹5,00,000, the rebate is fully lost (no marginal relief in the old regime).
After rebate, cess @ 4% is added on the remaining tax (if any).
Worked example
### Example 1
Example — Three Cases
Particulars
Case I
Case II
Case III
Total Income
₹5,00,000
₹4,10,000
₹5,10,000
Tax (before rebate)
₹12,500
₹8,000
₹14,500
(-) Rebate u/s 87A
(₹12,500)
(₹8,000)
NIL (TI exceeds ₹5 lac)
Tax after Rebate
NIL
NIL
₹14,500 + 4% cess
Observation: Even a ₹10,000 increase in income beyond ₹5,00,000 results in ₹14,500 tax + cess being payable — full rebate is lost.
⚠️ Common exam mistakes
Granting rebate to a Non-Resident individual — it is available only to a Resident Individual.
Granting rebate to HUF, firm, or company — Section 87A is restricted to Resident Individuals.
Adding cess first and then applying rebate. Correct order: tax → rebate → add cess on balance.
Confusing the old regime rebate (₹12,500 / TI ≤ ₹5 lakh) with the new regime u/s 115BAC rebate (₹60,000 / TI ≤ ₹12 lakh).
Bare-Act text Section 87A · Income Tax Act, 1961 · click to expand
An assessee, being an individual resident in India, whose total income does not exceed five hundred thousand rupees, shall be entitled to a deduction, from the amount of income-tax (as computed before allowing the deductions under this Chapter) on his total income with which he is chargeable for any assessment year, of an amount equal to hundred per cent of such income-tax or an amount of twelve thousand and five hundred rupees, whichever is less.