What is the age criteria for senior citizens to claim the rebate under Section 87A?

Senior citizens must be between the ages of 60 and 79 years to claim the rebate under Section 87A. Those above 80 years are typically considered super senior citizens, who are generally not eligible for this rebate, although some exceptions may apply.

Is the rebate available for super senior citizens (80+)?

While the rebate is generally not available to super senior citizens under Section 87A, recent clarifications suggest that if their income is within the prescribed limits, they may claim the rebate. However, this is not a common practice.

How much is the maximum rebate under Section 87A for senior citizens?

The maximum rebate available under Section 87A for senior citizens is ₹12,500, or the total tax payable (before cess), whichever is lower. This rebate helps reduce their tax liability to zero if their income falls within the limits.

Does Section 87A apply to both old and new tax regimes?

Yes, Section 87A is applicable under both the old and new tax regimes. Senior citizens can choose the regime that benefits them the most, based on their income and eligible deductions.

Can senior citizens claim the rebate if their income exceeds ₹5 lakh under the old tax regime?

No, the rebate under Section 87A is only available if the taxable income does not exceed ₹5 lakh under the old tax regime. If the income exceeds this limit, senior citizens are not eligible for the rebate.

What income types are eligible for the Section 87A rebate?

The rebate under Section 87A applies to normal income taxed at slab rates, long-term capital gains under Section 112 (excluding listed equity shares and equity-oriented mutual funds), and short-term capital gains under Section 111A.

Are short-term capital gains eligible for the rebate under Section 87A?

Yes, short-term capital gains taxed under Section 111A are eligible for the rebate under Section 87A, provided the total taxable income does not exceed the prescribed limits.

How can a senior citizen ensure they claim all eligible deductions before applying the rebate?

Senior citizens should ensure they claim deductions available under Chapter VIA, such as 80C, 80D, and 80TTB, before calculating their taxable income. These deductions reduce the overall taxable income, maximizing the benefit of the rebate.

What happens if a senior citizen has income from business or profession?

Senior citizens with income from business or profession are still eligible for the rebate under Section 87A, provided their taxable income does not exceed the prescribed limit. However, they must pay advance tax if their estimated liability exceeds ₹10,000.

Is it mandatory for senior citizens to pay advance tax?

No, senior citizens who do not have income from business or profession and whose estimated tax liability is below ₹10,000 are exempted from paying advance tax.

Can the rebate under Section 87A be claimed if the tax liability is already zero?

No, if a senior citizen’s tax liability is already zero, the rebate under Section 87A cannot be claimed, as the rebate is designed to reduce tax payable, not to provide a refund.

Section 87A for Senior Citizens: Tax Rebate Details and Eligibility Explained

Rajesh Kumar Kar
Apr 22
8 min read

Section 87A of the Income Tax Act, 1961, offers a valuable tax rebate for senior citizens, providing relief from their income tax burden. This rebate is designed to reduce the taxable amount for eligible taxpayers, specifically those with a taxable income below certain limits. Senior citizens, aged between 60 and 79 years, can avail of this benefit under both the old and new tax regimes, making it an essential component of their tax planning strategies. Understanding the income thresholds, the types of income eligible for the rebate, and the filing process can help maximize the benefit and ensure smooth tax filing. Let’s explore how this rebate works for senior citizens and what steps they need to take to claim it.

Section 87A for Senior Citizens
What is Section 87A?
Eligibility for Senior Citizens under Section 87A
Income Limits and Rebate Amount for Senior Citizens
How Section 87A Works for Senior Citizens
Important Notes for Senior Citizens Regarding Section 87A
How to Claim Section 87A Rebate as a Senior Citizen
Summary Table for Senior Citizens
Frequently Asked Questions (FAQs)

Section 87A for Senior Citizens

Section 87A of the Income Tax Act provides a tax rebate to resident individual taxpayers, including senior citizens, whose total taxable income does not exceed the prescribed threshold. The rebate effectively reduces the tax liability to zero for eligible taxpayers, subject to certain conditions. For senior citizens, this means that they can significantly lower their tax burden, ensuring more financial relief during retirement or post-retirement years.

What is Section 87A?

Section 87A offers a rebate on the income tax payable by resident individuals with taxable incomes that fall below a certain limit. The rebate reduces the amount of tax payable, and in some cases, it can bring the tax liability down to zero. The rebate amount is capped at ₹12,500 or the total tax payable (before the cess), whichever is lower. Senior citizens, as residents of India aged between 60 and 79, can avail themselves of this benefit provided they meet the eligibility criteria.

Eligibility for Senior Citizens under Section 87A

Resident Individuals Only

To claim the rebate under Section 87A, taxpayers must be resident individuals. This means that only those who qualify as residents under the provisions of the Income Tax Act are eligible to avail of this rebate. Non-residents and Hindu Undivided Families (HUFs) are excluded from the benefit.

Age Criteria: Senior Citizens and Super Senior Citizens

Senior citizens are individuals aged between 60 and 79 years. These taxpayers are eligible for the Section 87A rebate, provided their taxable income falls within the specified limits. On the other hand, super senior citizens, aged 80 years and above, generally are not eligible for the rebate. However, there have been occasional clarifications that may allow super senior citizens to claim the rebate, but this is an exception rather than the rule.

Income Limits and Rebate Amount for Senior Citizens

Income Limits under Old Tax Regime

Under the old tax regime, senior citizens (60–79 years) can claim the Section 87A rebate if their total taxable income does not exceed ₹5 lakh after deductions. If their taxable income is within this limit, they are eligible to receive a rebate of up to ₹12,500, which can reduce their tax liability to zero.

Income Limits under New Tax Regime

For the new tax regime, the income threshold has been increased. Senior citizens can claim the rebate if their taxable income does not exceed ₹12 lakh. This represents a significant increase compared to the old tax regime's limit of ₹5 lakh, allowing senior citizens to avail themselves of a higher rebate under this regime.

How Section 87A Works for Senior Citizens

Applicability to Different Types of Income

Section 87A applies to several types of income, including:

Normal Income: This includes income from salary, pension, and other regular sources.
Long-Term Capital Gains: Income from long-term capital gains under Section 112, excluding listed equity shares and equity-oriented mutual funds.
Short-Term Capital Gains: Income from short-term capital gains under Section 111A, which is taxed at flat rates for listed equity shares and mutual funds.

For senior citizens, the rebate can be applied to all these types of income, provided the income falls under the prescribed limits.

Non-Applicable Income Types

However, the rebate does not apply to:

Long-Term Capital Gains under Section 112A: These are gains from listed equity shares and equity-oriented mutual funds, which are subject to a different tax rate and are not eligible for the Section 87A rebate.
Income from Business or Profession: If a senior citizen has income from a business or profession, they may not be eligible for the rebate if their taxable income exceeds the limit.

By understanding the scope and limits of Section 87A, senior citizens can optimize their tax filings and reduce their liability effectively.

Important Notes for Senior Citizens Regarding Section 87A

Senior citizens can significantly benefit from Section 87A, but there are a few key points to keep in mind to ensure they don’t miss out on this rebate. The rebate is automatically calculated during the Income Tax Return (ITR) filing process, making it convenient for taxpayers. However, it's essential to note that this rebate only applies to resident individuals, excluding non-residents and Hindu Undivided Families (HUFs). Additionally, senior citizens with income from business or profession must ensure they meet all criteria, as the rebate may not be applicable in specific cases.

Advance Tax Exemption for Senior Citizens

One of the key advantages for senior citizens is the exemption from advance tax payments. If the estimated tax liability is less than ₹10,000, senior citizens are not required to pay advance tax. This rule provides a significant relief, reducing the financial burden for those who may not have a steady income flow or whose taxable income is on the lower end of the spectrum. However, this exemption only applies to senior citizens who do not have income from business or profession. Those who do will need to assess whether they need to pay advance tax based on their overall liability.

Recent Court Rulings and Clarifications

A recent ruling by the Bombay High Court has reinforced the eligibility of senior citizens to claim the Section 87A rebate, even if they have income from special categories like capital gains. The court mandated that the Income Tax Department must allow eligible taxpayers to claim the rebate without any wrongful denial, regardless of the nature of their income. This ruling ensures that senior citizens who meet the basic eligibility criteria are not unjustly excluded from availing the tax benefits offered under Section 87A.

How to Claim Section 87A Rebate as a Senior Citizen

Claiming the Section 87A rebate is a straightforward process for senior citizens, as the tax department has automated the procedure within the ITR filing process. When filing the ITR, taxpayers need to ensure that their taxable income falls within the specified limits. If so, the rebate will be applied automatically, and they will benefit from the reduced tax liability. However, it’s crucial for senior citizens to make sure that they have claimed all eligible deductions under Chapter VIA, such as deductions for life insurance premiums, medical insurance, and more, as these deductions reduce taxable income and ensure eligibility for the rebate.

Automatic Calculation During ITR Filing

The good news for senior citizens is that the Section 87A rebate is calculated automatically when filing the ITR. The Income Tax Department's e-filing portal takes into account the eligible income and applicable rebate limits, ensuring the taxpayer receives the benefit without needing to manually calculate or apply for it. Once the income and applicable deductions are entered correctly, the system will display the rebate amount that can be claimed. This makes the process seamless and easy for senior citizens who may not be familiar with the complex tax filing procedures.

Maximizing Benefits with Deductions under Chapter VIA

To make the most of Section 87A, senior citizens should ensure they utilize all available deductions under Chapter VIA before calculating their taxable income. Common deductions include those under Section 80C for life insurance, public provident fund (PPF), and National Savings Certificates (NSC), as well as deductions under Section 80D for medical insurance premiums. Additionally, senior citizens can claim deductions under Section 80TTB, which allows up to ₹50,000 of interest income from savings accounts, fixed deposits, and other specified sources to be deducted. By claiming these deductions, senior citizens can reduce their taxable income and increase the chances of qualifying for the full rebate under Section 87A.

Summary Table for Senior Citizens

Criteria	Details
Eligible Age	60 to 79 years (Senior Citizens)
Residency	Must be a resident individual
Income Limit (Old Regime)	Up to ₹5 lakh taxable income
Income Limit (New Regime)	Up to ₹12 lakh taxable income
Maximum Rebate Amount	₹12,500 or total tax payable (before cess), whichever is lower
Applicable Income Types	Normal income, long-term capital gains under Section 112 (excluding listed equity shares), short-term capital gains under Section 111A
Non-Applicable Income Types	Long-term capital gains under Section 112A (listed equity shares and equity-oriented mutual funds)
Super Senior Citizens (80+)	Generally not eligible, but may claim if income within limits (subject to conditions)
Filing	Rebate claimed automatically during ITR filing

This summary table provides a quick reference to the key points of eligibility, income limits, and the maximum rebate available for senior citizens under Section 87A. It’s a simple way for taxpayers to check if they qualify and how much they can expect to save on their taxes.

FAQs

What is the age criteria for senior citizens to claim the rebate under Section 87A?
Senior citizens must be between the ages of 60 and 79 years to claim the rebate under Section 87A. Those above 80 years are typically considered super senior citizens, who are generally not eligible for this rebate, although some exceptions may apply.
Is the rebate available for super senior citizens (80+)?
While the rebate is generally not available to super senior citizens under Section 87A, recent clarifications suggest that if their income is within the prescribed limits, they may claim the rebate. However, this is not a common practice.
How much is the maximum rebate under Section 87A for senior citizens?
The maximum rebate available under Section 87A for senior citizens is ₹12,500, or the total tax payable (before cess), whichever is lower. This rebate helps reduce their tax liability to zero if their income falls within the limits.
Does Section 87A apply to both old and new tax regimes?
Yes, Section 87A is applicable under both the old and new tax regimes. Senior citizens can choose the regime that benefits them the most, based on their income and eligible deductions.
Can senior citizens claim the rebate if their income exceeds ₹5 lakh under the old tax regime?
No, the rebate under Section 87A is only available if the taxable income does not exceed ₹5 lakh under the old tax regime. If the income exceeds this limit, senior citizens are not eligible for the rebate.
What income types are eligible for the Section 87A rebate?
The rebate under Section 87A applies to normal income taxed at slab rates, long-term capital gains under Section 112 (excluding listed equity shares and equity-oriented mutual funds), and short-term capital gains under Section 111A.
Are short-term capital gains eligible for the rebate under Section 87A?
Yes, short-term capital gains taxed under Section 111A are eligible for the rebate under Section 87A, provided the total taxable income does not exceed the prescribed limits.
How can a senior citizen ensure they claim all eligible deductions before applying the rebate?
Senior citizens should ensure they claim deductions available under Chapter VIA, such as 80C, 80D, and 80TTB, before calculating their taxable income. These deductions reduce the overall taxable income, maximizing the benefit of the rebate.
What happens if a senior citizen has income from business or profession?
Senior citizens with income from business or profession are still eligible for the rebate under Section 87A, provided their taxable income does not exceed the prescribed limit. However, they must pay advance tax if their estimated liability exceeds ₹10,000.
Is it mandatory for senior citizens to pay advance tax?
No, senior citizens who do not have income from business or profession and whose estimated tax liability is below ₹10,000 are exempted from paying advance tax.
Can the rebate under Section 87A be claimed if the tax liability is already zero?
No, if a senior citizen’s tax liability is already zero, the rebate under Section 87A cannot be claimed, as the rebate is designed to reduce tax payable, not to provide a refund.
How can senior citizens benefit from the increased income limit under the new tax regime?

Under the new tax regime, the income limit for claiming the rebate has increased to ₹12 lakh. This means that senior citizens with taxable income up to ₹12 lakh can benefit from the rebate, significantly lowering their tax liability.

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