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After all the problems in the form of thousands of taxes faced by the taxpayers, in the budget of 2016, a minute relief against income tax has been provided for small tax payers. The rebate enhance from Rs.2000/- to Rs.5,000/- for F.Y.2016-17 which is now available to small tax payers who have income below Rs. 5,00,000. There are some misconceptions among the people regarding this relief being available to them, this article focuses on the technical point of view for the relief under section 87A.
Conditions of claiming Rebate u/s 87A:
1.   The taxpayer must be a resident individual and is not applicable to NRI.
2.   The income of the tax payer should not exceed Rs. 5,00,000 after claiming deduction u/s 80C to 80U.
Amount to be claimed:
Tax payer can claim the rebate u/s 87A if the above two conditions are satisfied. The amount of rebate which can be claimed by resident individual is 100% of the income tax payable on total income after deduction of 80C to 80U or Rs. 5000/- whichever is lower. This rebate is allowed out of the total income tax payable amount without adding surcharge and education cess.

Effective Date of section 87 A:
Tax payers can take the benefit of this section from the AY 17-18 i.e. FY 16-17. This section is not applicable for NRI, resident or non-resident HUF/AOP/BOI or any tax payer other than resident individual.
Wrong understanding of section 87A
Some tax payer might end up with the conclusion that when tax payable is below Rs. 2000 or Nil then also they can claim the rebate of Rs. 5000 but as discussed earlier that lower of the 100% of income tax or Rs. 2000 is allowed as rebate cum relief to tax payers.

For Example:  Mr. X earns income during the year and after deduction it comes to Rs. 215000. So tax on Rs. 215000 is Rs. 1500. Rebate allowable will be RS. 1500 or Rs. 5000 whichever is lower. Therefore rebate of Rs. 1500 will be given to the tax payer and not Rs. 5000.