# Rebate under Section 87A
Rebate u/s 87A is a DIRECT REDUCTION FROM TAX available to Resident Individuals whose income falls below specified thresholds.
## Eligibility
- Only RESIDENT INDIVIDUALS (not HUF, not Non-Resident)
- Senior citizens are eligible (if resident)
## Under DEFAULT REGIME — Section 115BAC(1A)
### Conditions
- Available when Total Income up to Rs. 12,00,000
- Rebate = 100% of tax subject to maximum of Rs. 60,000
### Marginal Relief (where TI marginally exceeds Rs. 12,00,000)
> If Total Income exceeds Rs. 12,00,000 slightly, rebate is given such that the TAX PAYABLE does not exceed the EXCESS over Rs. 12,00,000.
>
> Tax on the income should not be greater than (Total Income − Rs. 12,00,000)
This is the "marginal relief" concept — think of it like Marginal Relief for Surcharge.
### Important Restriction under Default Regime
> Rebate is NOT available against Tax on Special Income, i.e., income taxed u/s 111A, 112A, 112, 115BB, 115BBE etc.
## Under OPTIONAL REGIME (Old Tax Regime)
### Conditions
- Available when Total Income up to Rs. 5,00,000
- Rebate = 100% of tax subject to maximum of Rs. 12,500
### Important Restriction
> Rebate u/s 87A under Optional Regime is NOT available on Tax payable on LTCG u/s 112A.
## Quick Summary
| Parameter | Default Regime 115BAC(1A) | Optional Regime (Old) |
|---|
| Maximum Total Income | Rs. 12,00,000 | Rs. 5,00,000 |
| Maximum Rebate | Rs. 60,000 | Rs. 12,500 |
| Marginal Relief | Yes (TI > 12 lakhs) | No |
| Special Income Coverage | NOT covered (111A, 112A, 112, 115BB excluded) | Excluded for 112A only |
### Example 1
Example 1 (Default Regime): Mr. A (Resident Individual) has Total Income of Rs. 11,00,000.
Tax computation:
- Up to Rs. 4,00,000 → Nil
- Rs. 4-8 lakh → 5% × 4,00,000 = Rs. 20,000
- Rs. 8-11 lakh → 10% × 3,00,000 = Rs. 30,000
- Tax = Rs. 50,000
- Rebate u/s 87A = Rs. 50,000 (since TI ≤ 12 lakh and rebate ≤ 60,000)
- Net Tax = NIL
### Example 2
Example 2 (Marginal Relief — Default): Mr. B has Total Income of Rs. 12,10,000.
Tax computation:
- Tax (computed normally) = Rs. 61,500 (illustrative)
- TI exceeds Rs. 12,00,000 by Rs. 10,000
- Apply marginal relief: Tax payable cannot exceed Rs. 10,000 (the excess)
- Net Tax = Rs. 10,000 (after marginal relief via rebate)
### Example 3
Example 3 (Optional Regime): Mr. C (Old Regime) has Total Income of Rs. 4,80,000.
Tax computation:
- Up to Rs. 2,50,000 → Nil
- Rs. 2,50,001 to Rs. 4,80,000 (Rs. 2,30,000) × 5% = Rs. 11,500
- Rebate u/s 87A = Rs. 11,500 (TI ≤ 5 lakh, rebate ≤ 12,500)
- Net Tax = NIL
### Example 4
Example 4 (Excluded Special Income): Mr. D (Default Regime) has TI = Rs. 11,00,000 of which Rs. 4,00,000 is LTCG u/s 112A.
- Tax on LTCG 112A: (4,00,000 − 1,25,000) × 12.5% = Rs. 34,375
- Tax on other income Rs. 7,00,000:
- 0–4L: Nil
- 4L–7L: 5% × 3L = Rs. 15,000
- Rebate u/s 87A: Available only on Rs. 15,000 (tax on non-special income). NOT on Rs. 34,375.
- After rebate: Special tax Rs. 34,375 still payable.
### Example 5
Example 5 (Non-Resident): Mr. E (Non-Resident Individual) has TI of Rs. 4,00,000.
Rebate u/s 87A? NOT AVAILABLE — only Resident Individuals are eligible. He pays tax as per slabs without rebate.