Applicability of section 87A

REBATE OF 2,500 IS AVAILABLE WHEN (GROSS TAXABLE INCOME - DEDUCTION U/C VI-A) IS LESS THAN 3,50,000

Hi Ritu,

According to section 87A of Income Tax Act, An assessee, being an individual resident in India, whose total income does not exceed three lac fifty 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 and five hundred rupees, whichever is less.

Hence if the total income (Gross Total Income - Deductions under Chapter VI-A) of a resident individual is Rs. 3,50,000 or less, he can claim the rebate under section 87A.

Total Income includes Taxable Income From Salary. Hence, from the total salary, tax-free portion of all allowances such as HRA, Conveyance Allowance etc. are deducted to calculate the Taxable Income From Salary.

Regards,

Hardik Lashkari