Rebate U/s. 87A for FY 2014-15 / AY 2015-16

Finance Bill 2014 has increased Income Tax Exemption Limit by Rs. 50000/- for Individuals and Senior Citizens below the Age of 80 Years. Now the Question arises is do Rebate of income-tax under section 87A as applicable for FY 2013-14 also available for FY 2014-15 and subsequent years.

Finance Act 2013 has introduced the rebate U/s. 87A and in this section it has not restricted the exemption to any particular Financial or Assessment year. Further in Recently Presented Budget 2014 by Finance Minister Arun Jaitley  section 87A was not been amended.

So in our view Rebate U/s. 87A is Available to Resident Individuals for A.Y. 2015-16/ FY 2014-15 , whose total income does not exceed 5 Lakh rupees in Financial Year 2014-15. Further rebate is also  available for all the years succeeding A.Y. 2015-16 on compliance of conditions  unless specifically withdrawn.

Key Points

• Amended Section 87A is  applicable from 1st April, 2014 and will, accordingly, apply in relation to the assessment year 2014-15 and subsequent assessment years.
• Rebate is available only to Resident individuals and not available to Non Residents.
• Rebate available to both Male and Female assesses
• If the total tax payable by is less than Rs. 2000/-, rebate is restricted to “total tax payable”.
• Rebate is allowed before levy of Education Cess, SHE Cess & Surcharge.
• Rebate benefit is available to all category of Individuals but not to super senior citizen, since he is already fully exempted up to Rs. 5 lakh.
• Above amendment does not mean that basic Exemption Limit has been raised from Rs. 2,50,000/- to Rs. 2,70,000/-.

Extract of Section 87A is as follows :-

The following section 87A shall be inserted after section 87 by the Finance Act, 2013, w.e.f. 1-4-2014 :

Rebate of income-tax in case of certain individuals.

87A. 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 two thousand rupees, whichever is less.