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With a view to providing tax relief to the individual taxpayers who are in lower income bracket, a rebate is provided for under section 87A.

This rebate will be available if the following two conditions are satisfied.
1. Taxpayer is resident individual (he may be ordinarily resident or not ordinarily resident).
2. His Total income or net income or taxable income (i.e. gross total income minus deduction under section 80C to 80U) is Rs. 5 Lacs or Less:

Amount of Rebate:: If the above conditions are satisfied, the resident individual can claim rebate under section 87A. This rebate will be available from the assessment year 2014-15 onwards. The amount of rebate is 100 percent of total income tax payable on total income of Rs. 2000, whichever is less. This rebate will be available from income tax (before adding surcharge and education cess). Consequently, a resident individual (not being a senior citizen) having income up to Rs. 220000 will not be required to pay any tax and if total income is above Rs. 220000 but not exceeding Rs. 500000, a rebate of Rs. 2000 will be allowed. A resident individual (being a senior citizen) having income upto Rs. 270000 will not be required to pay any tax and if total income is above Rs. 270000 but not exceeding Rs. 50000, a rebate of Rs. 2000 will be allowed.

Rebate u/s 87A is not available in the case of a non resident individual, resident or non resident HUF/AOP/BOI or any taxpayer other than resident individual.

Here is a table to explain this more: 
Situation 1 Situation 2 Situation 3 Situation 4
Net Income 210000 220000 500000 600000
Income Tax on Net Income 10000 2000 30000 50000
Less: Rebate U/s 87A 10000 20000 20000 Nil
Balance Nil Nil 28000 50000
Add: Surchare Nil Nil Nil Nil
Total Nil Nil 28000 50000
Add: Education Cess @ 2% Nil Nil 560 1000
Add: S.E. Cess @ 1% Nil Nil 280 500
Tax Liability Nil Nil 28840 51500

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