In the Interim Budget 2019 presented in February before the Lok Sabha elections while the tax slabs were retained as though, taxpayers with a total income of less than Rs. 5 lakh were provided with some relief through the provision of rebate.

As part of section 87A of the Income Tax Act, a maximum rebate of up to Rs. 12,500 was extended to the taxpayers. Earlier, to avail the rebate, the total income of the resident individual should not be exceeding Rs. 3.5 lakh. Further, the amount of rebate was equivalent to 100% of income tax or Rs. 2,500, whichever is less.

For the FY 2019-20, the interim budget increased the limit to Rs. 5 lakh and also raised the rebate amount to a maximum of up to Rs. 12,500.

As per the rules, Section 87A states that, "An assessee, being an individual resident in India, whose total income does not exceed Rs 5 lakh, shall be entitled to a deduction, from the amount of income-tax (as computed before allowing the deductions) 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 Rs 12,500, whichever is less."

Notably, section 87A benefit or rebate can be availed only if these 2 conditions are met during the FY 2019-20 i.e. the assessee should be a resident individual and also the total income after considering all the allowed deductions should be less than Rs. 5 lakh.

So, as we await the Full Budget 2019-20, due to be presented by the newly appointed finance minister Nirmala Sitharaman on July 5, it remains to be seen as to whether or not the section 87A rebate will be extended further to assessees with taxable income above Rs. 5 lakh.

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