NEW REGIME DEFAULT

Section 87A rebate: ₹12 lakh and zero tax

Section 87A reduces the income tax you pay. In the new regime, taxable income up to ₹12,00,000 has no income tax, because the rebate covers the slab tax. From ₹12,00,000 to about ₹12,70,588, marginal relief caps the tax. The figures on this page are for FY 2026-27. The CBDT resident-benefits table is labelled AY 2026-27. That label is not FY 2026-27.

Official sources

Resident benefits, the Section 87A table (page labelled AY 2026-27, not FY 2026-27)
Section 115BAC, the new regime
Employee benefits, including the standard deduction (page labelled AY 2026-27, not FY 2026-27)
Income-tax return forms

What the rebate is

Section 87A is a rebate. It reduces the tax after the slabs are worked out. It does not reduce the income those slabs are applied to. On the resident-benefits table labelled AY 2026-27, the rebate under section 115BAC(1A) is ₹60,000 when taxable income is ₹12,00,000 or less.

NEW REGIME NEW REGIME DEFAULT

₹0 tax if TI ≤ ₹12L

Rebate: ₹60,000. If taxable income is ₹12,00,000 or less, you pay no income tax. At ₹12,00,000 the slab tax is ₹0 on the first ₹4,00,000, 5% on the next ₹4,00,000 (₹20,000), and 10% on the next ₹4,00,000 (₹40,000). That is ₹60,000. The rebate is the same amount, so the tax is ₹0.

OLD REGIME

₹0 tax if TI ≤ ₹5L

Rebate: ₹12,500. If taxable income is ₹5,00,000 or less, the rebate is ₹12,500 or the tax, whichever is smaller, and the tax comes to ₹0. Above ₹5,00,000 the old-regime rebate is not available.

check_circle At ₹12,00,000

The new-regime slab tax is ₹60,000, and the ₹60,000 rebate removes it. Both regimes add 4% health and education cess on the tax. When the tax is ₹0, the cess is ₹0 too.

Just above ₹12 lakh

Marginal relief caps the tax when taxable income is a little above ₹12,00,000. Between ₹12,00,000 and about ₹12,70,588, the tax before cess cannot be more than the income above ₹12,00,000.

Marginal relief

If taxable income is above ₹12,00,000 and the slab tax is more than (taxable income − ₹12,00,000):
Tax = taxable income − ₹12,00,000

The cap is before cess. At ₹12,50,000 the cap is ₹50,000. The slab tax is ₹67,500. You pay ₹50,000 of tax, then 4% cess. The table below shows ₹52,000 in total.

Three bands

₹0 to ₹12,00,000

Zero tax

₹12,00,000 to about ₹12,70,588

Marginal relief

Tax before cess equals income above ₹12,00,000. About ₹70,000 more income means about ₹70,000 of tax before cess.

₹12,70,588 and above

Normal slab rates

warning Where marginal relief ends

Marginal relief ends at a taxable income of about ₹12,70,588 (before cess). Below that, tax is capped at the amount above ₹12,00,000. Above it, the full slab tax applies. ESTIMATE

At ₹12,70,588, slab tax (₹70,588) equals the amount above ₹12,00,000, so no rebate or relief remains. The figure assumes no other income adjustments.

Tax at each income

New regime tax for FY 2026-27. The rebate and marginal relief are included where they apply. Cess at 4% is added after that.

Taxable Income	Slab Tax	87A / Relief	After Rebate	+ 4% Cess	Total Tax
₹12,00,000	₹60,000	−₹60,000 (rebate)	₹0	₹0	₹0
₹12,10,000	₹61,500	Marginal relief	₹10,000	₹400	₹10,400
₹12,25,000	₹63,750	Marginal relief	₹25,000	₹1,000	₹26,000
₹12,50,000	₹67,500	Marginal relief	₹50,000	₹2,000	₹52,000
₹12,75,000	₹71,250	None (71.25K < 75K)	₹71,250	₹2,850	₹74,100
₹13,00,000	₹75,000	None	₹75,000	₹3,000	₹78,000
₹14,00,000	₹90,000	None	₹90,000	₹3,600	₹93,600
₹15,00,000	₹1,05,000	None	₹1,05,000	₹4,200	₹1,09,200
₹16,00,000	₹1,20,000	None	₹1,20,000	₹4,800	₹1,24,800
₹20,00,000	₹2,00,000	None	₹2,00,000	₹8,000	₹2,08,000

check_circle Slab rates used above

₹0 to ₹4,00,000 at 0%. ₹4,00,000 to ₹8,00,000 at 5%. ₹8,00,000 to ₹12,00,000 at 10%. ₹12,00,000 to ₹16,00,000 at 15%. ₹16,00,000 to ₹20,00,000 at 20%. ₹20,00,000 to ₹24,00,000 at 25%. Above ₹24,00,000 at 30%. The ₹60,000 rebate applies only when taxable income is ₹12,00,000 or less. From ₹12,00,000 to about ₹12,70,588, marginal relief caps the tax before cess at taxable income minus ₹12,00,000.

Type a taxable income

Type taxable income, not CTC. The ₹75,000 standard deduction is already out of that figure. The result uses the same new-regime rebate and marginal relief as the table, then adds 4% cess.

Limits on the rebate

warning Taxable income, not gross salary

The ₹12,00,000 limit is taxable income, not gross salary. With the ₹75,000 standard deduction in the new regime, gross salary of ₹12,75,000 leaves ₹12,00,000 taxable. The zero-tax gross salary on this page is ₹12.75 lakh, not ₹12 lakh. How salary components reach taxable income is on the CTC page.

warning It cuts tax, not income

Section 87A reduces the tax. It does not reduce taxable income. The slab tax is calculated first, then the rebate. Marginal relief uses that order. Section 80C reduces income. Section 87A does not. Deductions for salary are in the salaried employee guide.

info Old regime stops at ₹5 lakh

In the old regime the rebate is ₹12,500, and only when taxable income is ₹5,00,000 or less. Above ₹5,00,000 there is no rebate, so you pay the slab tax. In the new regime the rebate is ₹60,000 and the limit is ₹12,00,000. ₹60,000 is nearly five times ₹12,500. The regime comparator runs both calculations.

warning Special-rate income is outside it

The rebate covers slab-rate tax only. It does not cover short-term capital gains under section 111A (20%), long-term capital gains under section 112 or 112A (12.5%), or winnings under section 115BB (30%). If total income is ₹14,00,000 and ₹2,00,000 of that is long-term capital gains under section 112, slab tax is worked out on ₹12,00,000. The ₹2,00,000 is taxed at 12.5% on its own, with no rebate. The ₹12,00,000 limit leaves special-rate income out. CBDT Circular 13/2025. Share gains are covered on the capital gains guide.

info Resident individuals only

Non-residents, HUFs, companies, firms, and AOPs/BOPs cannot claim Section 87A. Only a resident individual can. An NRI filing ITR-2 or ITR-3 does not get the rebate at any income. The threshold and the rebate amounts do not apply to a non-resident.

Income tax calculator

Use the income tax calculator to see whether Section 87A brings your tax to ₹0.

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