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Tax Rebate Summary
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Open the ITR Calculator → View Income Tax SlabsWhat is Section 87A?
Section 87A of the Income Tax Act, 1961 provides a tax rebate to resident individual taxpayers whose total income falls within a specified limit. The rebate is subtracted from the tax liability computed at slab rates, before health & education cess is added. The result: if the rebate equals or exceeds the computed tax, the taxpayer's net liability becomes zero — making their income effectively tax-free.
FY 2025-26 limits at a glance
- New Regime: Income ≤ ₹12,00,000 → full rebate up to ₹60,000 → net tax = ₹0. Marginal relief applies if income slightly exceeds ₹12L.
- Old Regime: Income ≤ ₹5,00,000 → full rebate up to ₹12,500 → net tax = ₹0.
These thresholds refer to total taxable income — i.e., after all deductions and exemptions have been applied.
How marginal relief works
Consider two taxpayers under the New Regime: one earns ₹12,00,000 (net tax = ₹0 due to full rebate) and another earns ₹12,10,000. Without marginal relief, the second person would pay several thousand rupees just because their income crossed the threshold by ₹10,000 — which would be inequitable. Marginal relief limits the net tax to the amount by which income exceeds ₹12,00,000. So for ₹12,10,000, the net tax cannot exceed ₹10,000.
Does special-rate income get the rebate?
No. Tax on long-term capital gains under Section 112A (listed equity / equity mutual funds) and short-term capital gains under Section 111A are taxed at special flat rates and the 87A rebate does not apply to those components. The rebate reduces only the tax computed at slab rates on ordinary income. If you have significant LTCG or STCG, use the full ITR calculator for an accurate picture.
Worked example — New Regime
Taxable income: ₹11,00,000. Slab tax (New Regime): 0–4L = ₹0; 4–8L = ₹20,000 (5%); 8–11L = ₹30,000 (10%). Tax = ₹50,000. Since income ≤ ₹12L, rebate u/s 87A = ₹50,000 (full tax, capped at ₹60,000). Tax after rebate = ₹0. Cess = 4% of ₹0 = ₹0. Net tax payable = ₹0.
Worked example — Old Regime
Taxable income: ₹4,80,000. Slab tax (Old Regime, below 60): 0–2.5L = ₹0; 2.5–4.8L = ₹11,500 (5%). Tax = ₹11,500. Since income ≤ ₹5L, rebate u/s 87A = ₹11,500 (full tax, capped at ₹12,500). Tax after rebate = ₹0. Cess = ₹0. Net tax payable = ₹0.
Frequently asked questions
What is Section 87A of the Income Tax Act?
Section 87A provides a rebate on computed income tax for resident individuals whose total income does not exceed a prescribed limit. The rebate makes qualifying incomes effectively tax-free after considering the limit for each regime.
Who is eligible for the 87A rebate under the New Regime for FY 2025-26?
Resident individuals with total taxable income up to ₹12,00,000 under the New Regime qualify for a rebate up to ₹60,000, making net tax = ₹0. Marginal relief applies just above ₹12 lakh.
What is the 87A rebate limit under the Old Regime?
Under the Old Regime, resident individuals with income up to ₹5,00,000 get a rebate up to ₹12,500, making net tax = ₹0.
Does LTCG or STCG income count for the 87A rebate?
No. Tax on LTCG (Section 112A) and STCG (Section 111A) at special flat rates is not reduced by the 87A rebate. Only slab-rate tax on ordinary income qualifies.
Is my data stored or sent anywhere?
No. All calculations run entirely in your browser — nothing you type is transmitted to or stored on any server.