Key Points on Section 87A of the Income Tax Act

1. Purpose: Section 87A provides tax relief to individual taxpayers with lower incomes.
2. Eligibility: Applicable only to individual taxpayers, including residents and non-residents.
3. Income Limit: Total taxable income must not exceed ₹7 lakh to qualify for the rebate.
4. Rebate Amount: Maximum rebate available is ₹25,000.
5. Tax Liability: If tax liability is ₹25,000 or less, the rebate can eliminate the tax payable.
6. Calculation: Total taxable income is calculated after deductions and exemptions.
7. Example 1: Income of ₹6,50,000 qualifies for a rebate, resulting in no tax payable.
8. Example 2: Income of ₹8,00,000 exceeds the limit, making the taxpayer ineligible for the rebate.
9. Benefit: Helps reduce the tax burden for lower-income individuals.
10. Consultation: Always seek advice from a tax professional for personalized guidance.