Every rupee of eligible deduction reduces the income on which you pay tax. Section 87A of the Income-tax Act, 1961 is one such provision, and using it correctly can meaningfully lower your tax bill.
This guide explains Section 87A in plain language — the deduction limit, who can claim it, what is covered, the documents to keep, and the exact steps to claim it in your ITR.
What is 87A?
Section 87A gives a rebate that can reduce your tax liability to zero if your taxable income is within the threshold. The limits differ between the old and new regimes.
How much can you claim?
Old regime: rebate up to ₹12,500 for total income up to ₹5,00,000. New regime: enhanced rebate so that no tax is payable up to the notified income threshold.
Who is eligible
- Resident individuals.
- Income must be within the applicable threshold for the chosen regime.
What is covered
- A direct rebate against computed tax (not a deduction from income).
Documents and proof to keep
- No separate proof — computed automatically in the return.
Retain these documents even though they are not attached to the return — the tax department can ask for them during processing or assessment.
Old regime zero-tax
Under the old regime, if your taxable income is ₹4,90,000, tax before rebate is about ₹12,000; the 87A rebate wipes it out, so your tax is nil.
Points to remember
- The new-regime rebate threshold was raised in Budget 2025 — check the current-year limit before relying on it.
- 87A is a rebate on tax, applied after computing tax and before cess.
How to claim it in your ITR
- Gather proof. Collect the certificates, receipts or statements listed above for the financial year.
- Choose the right regime. The deduction applies under both regimes, so pick whichever regime gives you a lower overall tax.
- Enter the amount. Report the eligible amount against Section 87A in the deductions schedule of your ITR on the income-tax e-filing portal.
- Verify and file. Cross-check against Form 26AS / AIS, then submit and e-verify the return within the prescribed time.
Frequently asked questions
Is 87A a deduction or a rebate?
It is a rebate — it reduces the tax you owe, not your taxable income.
Do NRIs get the 87A rebate?
No. Section 87A is available only to resident individuals.