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Budget 2019 Predictions Part III | Rebate u/s 87A

Updated on: 23 Nov, 2023 01:22 AM

What is your happy moment while filing ITR? Being a regular tax filer I feel great when my amount of tax is automatically reduced by Rebate u/s 87A. This direct relief to Income Tax Return filer being Resident Indian was first introduced via Budget 2013. From then onwards it has become a point of constant amendments in Budgets. Our discussion becomes even more interesting because the upcoming Budget 2019 would be an Interim Budget and last one of the ruling NDA government. So, it would be great to notice the changes proposed by the current government.

Lets us head towards the anticipation from the upcoming Interim Budget 2019. For better understanding, we will divide the discussion into two parts

  • Applicability of Rebate u/s 87A and
  • Quantum of Rebate

Applicability –

Rebate under section 87A of the Income Tax Act 1961 applies only when the total income of the Resident Individual is below specified criteria. For the ongoing Financial year 2018-19 (AY 2019-20) the limit is Rs 3,50,000. This limit has seen substantial changes since introduction as under

Financial Year Assessment Year Total Income not exceeding
2013-14 2014-15 5,00,000
2014-15 2015-16 5,00,000
2015-16 2016-17 5,00,000
2016-17 2017-18 5,00,000
2017-18 2018-19 3,50,000
2018-19 2019-20 3,50,000

Quantum of Rebate –

The amount of rebate available has also changed with changes in union budgets. But the formula to compute rebate has been unchanged which is, Lower of

  • 100% of tax so calculated or
  • The maximum amount of Rebate

Now let us take a glimpse of change in the trail of Maximum amount of Rebate u/s 87A over the fiscal years

Financial Year Assessment Year Maximum amount of Rebate u/s 87A
2013-14 2014-15 2,000
2014-15 2015-16 2,000
2015-16 2016-17 2,000
2016-17 2017-18 5,000
2017-18 2018-19 2,500
2018-19 2019-20 2,500

Now, from the Interim Budget 2019 to be presented on 1st Feb 2019 it is expected that 87A limits will also rise back again to its highest old levels or even higher. Which means the benefit of Rebate u/s 87A can range from

  • Total income threshold of Rs 5,00,000 or above
  • Rebate limits can be increased to Rs 5,000 to Rs 10,000

The said budget would be presented by interim Finance Minister Mr. Piyush Goyal.

Financial Year Assessment Year Total Income Threshold Maximum amount of Rebate u/s 87A
2019-20 2020-21 Rs 5,00,000 or above Rs 5,000 or above

In nutshell, we all should wait to find whether under the flagship of Modi Government the all-time upward limits of Rebate are restored or historic decision by setting up new highest benchmark is initiated. Let’s wait and watch!!

Recommended Read
Budget Prediction on Income Slab Limits Budget Predictions on Slab Tax Rates

CA Abhishek Soni
CA Abhishek Soni

Abhishek Soni is a Chartered Accountant by profession & entrepreneur by passion. He is the co-founder & CEO of Tax2win is amongst the top 25 emerging startups of Asia and authorized ERI by the Income Tax Department. In the past, he worked in EY and comes with wide industry experience from telecom, retail to manufacturing to entertainment where he has handled various national and international assignments.