Revised Tax Rebate under Sec.87A after Budget 2019

Effective from 1st April 2020, Tax Rebate under Sec.87A was revised in Budget 2019. Because of this there is no tax liability for those whose total taxable income is up to Rs.5,00,000.

Let us see the features of Sec.87A.
Revised Tax Rebate under Sec.87A after Budget 2019
You must be a RESIDENT INDIVIDUAL

Your Total Income, after Deductions, (like under Section 80C) is equal to or less than Rs.5,00,000 (Earlier it was Rs.3,50,000).
    The rebate is limited to Rs.12,500 (Earlier it was Rs.2,500).

It means if your total tax payable is lower than Rs.12,500, the amount will eligible for a rebate under Sec.87A. Do remember that the rebate should be applied to the total tax before adding the education cess (4%).

Do remember that there is no income tax slab rates changes for FY 2019-20. However, due to changes in Sec.87A, you can assume that if your taxable income is less than Rs.5,00,000, then your tax liability should be zero.

Explain the same with below examples.

You notice that up to Rs.5,00,000 of your total income even through there is tax laibility, due to revised limits of Sec.87A, your tax liability turn to be zero.

However, if your total income is more than Rs.5,00,000 then you are not eligible to claim the deduction under Sec.87A. Hence, there will not be any benefit for those who are under higher tax bracket