Section 87A gives a resident individual a rebate, which is a cut in income tax, when total income is low. For FY 2025-26 and FY 2026-27, the new regime rebate is up to ₹60,000 if total income is ₹12 lakh or less, so no tax is due. In the old regime it is up to ₹12,500 if total income is ₹5 lakh or less.
HUFs, non-residents, firms and companies cannot claim it. This guide explains the limits, who can claim, how the rebate is worked out, marginal relief, what happens with capital gains, and the limits for past years.
- New regime: rebate up to ₹60,000 when total income is up to ₹12 lakh. A salary of up to ₹12.75 lakh pays no tax, because the ₹75,000 standard deduction comes first.
- Old regime: rebate up to ₹12,500 when total income is up to ₹5 lakh. There is no marginal relief in the old regime.
- Just above ₹12 lakh (new regime), marginal relief keeps your tax no higher than the income above ₹12 lakh. It stops at about ₹12,70,590.
- Only a resident individual can claim it. Not an HUF, a non-resident, a firm or a company.
- New regime, from FY 2025-26: the rebate does not cover tax on income taxed at special rates, such as share gains under sections 111A and 112A.
What is the rebate under section 87A?
A rebate is a cut in the tax itself. A deduction, such as 80C, cuts your income before tax is worked out. Section 87A works after that: once your tax is worked out, it takes that tax off, up to a fixed amount, if your total income is within the limit.
- Where it sits: section 87A is in Chapter VIII, "Rebates and reliefs", of the Income-tax Act, 1961. It has been in the Act since FY 2013-14.
- "87A deduction" or "relief under 87A": people use these names too. In law it is a deduction from the tax, not from your income.
- From tax year 2026-27 (FY 2026-27): the same rebate is in section 156 of the Income-tax Act, 2025, with the same amounts.
- The rebate never goes below zero. It can bring your tax down to nil, but it cannot create a refund on its own.
The Income-tax Act has other reliefs too, such as section 89 relief on salary arrears. This guide covers section 87A only.
87A rebate limit for FY 2025-26 and FY 2026-27
| New regime | Old regime | |
|---|---|---|
| Total income limit | ₹12 lakh | ₹5 lakh |
| Maximum rebate | ₹60,000 | ₹12,500 |
| Total income just above the limit | Marginal relief | No rebate |
| Tax on share gains under 111A | Not covered | Covered |
| Tax on share gains under 112A | Not covered | Not covered |
| Law for FY 2025-26 | Section 87A, first proviso | Section 87A |
| Law for FY 2026-27 | Section 156(2), Income-tax Act 2025 | Section 156(1) |
Why ₹12 lakh means no tax in the new regime. The new regime tax on ₹12 lakh is ₹60,000 (5% of ₹4 lakh plus 10% of ₹4 lakh), and the rebate is up to ₹60,000. So the two cancel out.
Why ₹5 lakh means no tax in the old regime. For a person below 60, the old regime tax on ₹5 lakh is ₹12,500 (5% of ₹2.5 lakh), and the rebate is up to ₹12,500.
New regime slabs, FY 2025-26 and FY 2026-27:
| Total income | Tax rate |
|---|---|
| Up to ₹4 lakh | Nil |
| ₹4 lakh to ₹8 lakh | 5% |
| ₹8 lakh to ₹12 lakh | 10% |
| ₹12 lakh to ₹16 lakh | 15% |
| ₹16 lakh to ₹20 lakh | 20% |
| ₹20 lakh to ₹24 lakh | 25% |
| Above ₹24 lakh | 30% |
- Total income means income after the deductions you are allowed: the standard deduction, and in the old regime 80C, 80D and others. Our reading: capital gains count in total income for the ₹12 lakh and ₹5 lakh tests, because the section uses "total income". See 87A and capital gains.
- Cess comes after the rebate. The 4% health and education cess is worked out on the tax left after the rebate. If the rebate wipes out the tax, there is no cess either.
- Senior citizens get the same rebate. Their old regime exemption limit is higher (₹3 lakh at 60 to 79, ₹5 lakh at 80 or more). See income tax for senior citizens.
- Budget 2026 did not change the amounts. The section 87A text (2026 version) and section 156 of the 2025 Act both carry ₹60,000 and ₹12 lakh.
Who can claim the 87A rebate?
| Taxpayer | Can claim 87A? |
|---|---|
| Resident individual, any age | Yes, if total income is within the limit |
| Senior or super senior citizen, resident | Yes, same limits |
| Non-resident individual (NRI) | No |
| Hindu Undivided Family (HUF) | No |
| Firm, LLP, company or any other non-individual | No |
- The test is about you, not your kind of income. A resident individual with salary, pension, business, freelance or rental income can claim it if total income is within the limit.
- The e-filing ITR-2 checks for AY 2026-27 reject an 87A claim by an HUF or a non-resident.
Why the 87A rebate may not apply to you
- Your total income is above ₹12 lakh (new regime) beyond the marginal relief range, or above ₹5 lakh (old regime).
- You are not a resident individual (NRI, HUF, firm, company).
- The tax is on income taxed at special rates (for example share gains under 111A or 112A in the new regime). The rebate covers slab-rate tax only.
How the 87A rebate is calculated, with examples
- Work out your total income (after deductions).
- Work out tax at slab rates. Tax on income taxed at special rates is worked out separately.
- If total income is within the limit, the rebate is the lower of your slab-rate tax and the cap (₹60,000 new regime, ₹12,500 old regime).
- Take the rebate off. Add 4% cess on what is left.
New regime, salary only, FY 2025-26 or FY 2026-27
| Salary | Total income (after ₹75,000 standard deduction) | Tax at slab rates | Rebate | Tax with 4% cess |
|---|---|---|---|---|
| ₹10,00,000 | ₹9,25,000 | ₹32,500 | ₹32,500 | Nil |
| ₹12,00,000 | ₹11,25,000 | ₹52,500 | ₹52,500 | Nil |
| ₹12,75,000 | ₹12,00,000 | ₹60,000 | ₹60,000 | Nil |
| ₹13,00,000 | ₹12,25,000 | ₹63,750 | ₹38,750 (marginal relief) | ₹26,000 |
| ₹14,00,000 | ₹13,25,000 | ₹78,750 | None | ₹81,900 |
So a salary of ₹12 lakh pays no tax in the new regime, and neither does a salary of ₹12.75 lakh. The ₹75,000 is the standard deduction on salary or pension, not a rebate.
Old regime, person below 60, FY 2025-26
| Total income | Tax at slab rates | Rebate | Tax with 4% cess |
|---|---|---|---|
| ₹4,00,000 | ₹7,500 | ₹7,500 | Nil |
| ₹5,00,000 | ₹12,500 | ₹12,500 | Nil |
| ₹5,10,000 | ₹14,500 | None | ₹15,080 |
The old regime has no marginal relief. In the last row, ₹10,000 of extra income costs ₹15,080 in tax.
To work out your own figure in both regimes, use our income tax calculator.
Marginal relief under section 87A
Without marginal relief, earning ₹1 above ₹12 lakh would cost about ₹60,000 in tax. Marginal relief stops that in the new regime.
The rule: if your total income is above ₹12 lakh, the tax you pay (before cess) cannot be more than the amount by which your income is above ₹12 lakh. The rebate is the gap between your slab-rate tax and that amount.
| Total income (new regime) | Tax at slab rates | Income above ₹12 lakh | Tax after marginal relief | Tax with 4% cess |
|---|---|---|---|---|
| ₹12,10,000 | ₹61,500 | ₹10,000 | ₹10,000 | ₹10,400 |
| ₹12,25,000 | ₹63,750 | ₹25,000 | ₹25,000 | ₹26,000 |
| ₹12,50,000 | ₹67,500 | ₹50,000 | ₹50,000 | ₹52,000 |
| ₹12,70,000 | ₹70,500 | ₹70,000 | ₹70,000 | ₹72,800 |
| ₹12,75,000 | ₹71,250 | ₹75,000 | ₹71,250 (no relief) | ₹74,100 |
- Where it ends: at about ₹12,70,590 of total income, the slab-rate tax becomes lower than the income above ₹12 lakh, so the relief stops. The e-filing ITR-1 checks for AY 2026-27 use this ₹12,70,590 figure.
- Who gets it: a resident individual in the new regime with total income a little above ₹12 lakh.
- Old regime: no marginal relief under 87A. Above ₹5 lakh, there is no rebate at all.
- FY 2023-24 and FY 2024-25: the same relief applied above ₹7 lakh, the new regime limit in those years.
- Not the same as marginal relief on surcharge. That is a separate relief for incomes above ₹50 lakh.
87A rebate on capital gains (STCG and LTCG)
From FY 2025-26, new regime: the rebate covers only tax at slab rates. It does not cover tax on income taxed at special rates, such as short-term gains on listed shares and equity funds (section 111A) and long-term gains (sections 112A and 112). The Finance Act, 2025 added a proviso that caps the rebate at the tax worked out at the new regime slab rates. The government's note on the Finance Bill, 2025 says the rebate "is not available on tax on incomes chargeable at special rates". For FY 2026-27, section 156(3) of the 2025 Act has the same cap.
| Tax on | New regime, FY 2025-26 and FY 2026-27 | Old regime |
|---|---|---|
| STCG on listed shares and equity funds (111A) | No rebate | Rebate allowed, if total income is up to ₹5 lakh |
| LTCG on listed shares and equity funds (112A) | No rebate | No rebate |
| Slab-rate income (salary, interest, rent and others) | Rebate allowed | Rebate allowed |
LTCG under section 112A is not taxed up to ₹1.25 lakh a year, so the rebate question only arises above that.
Example: new regime, FY 2025-26. Salary ₹9,75,000 and STCG on shares (111A) ₹1,00,000.
| Step | Amount |
|---|---|
| Salary after ₹75,000 standard deduction | ₹9,00,000 |
| Total income with the STCG | ₹10,00,000 (within ₹12 lakh) |
| Tax at slab rates on ₹9,00,000 | ₹30,000 |
| Rebate (covers slab-rate tax only) | ₹30,000 |
| Tax on STCG at 20% | ₹20,000 |
| Tax with 4% cess | ₹20,800 |
So your total income can be under ₹12 lakh and you can still pay tax, if part of it is share gains. More on how share gains are taxed: capital gains tax on shares.
FY 2023-24 and FY 2024-25 (AY 2024-25 and AY 2025-26): disputed, as of 11 October 2026. The Income Tax Department's view is that the new regime rebate did not cover tax on special-rate income in those years either. In September 2025, CBDT Circular No. 13/2025 waived interest under section 220(2) on demands raised by rectifying returns where this rebate had been allowed, if paid by 31 December 2025. On the other side, ITAT Ahmedabad (Jayshreeben Jayantibhai Palsana vs ITO, 12 August 2025) allowed the rebate on 111A gains for AY 2024-25, holding that section 87A had no words excluding that tax. If you got a demand on this point, read how to respond to a 143(1) intimation or ask a CA before you pay or appeal.
87A rebate limits year by year
| Financial year (assessment year) | Old regime (the only regime before FY 2020-21) | New regime |
|---|---|---|
| FY 2013-14 to FY 2015-16 (AY 2014-15 to AY 2016-17) | ₹2,000, total income up to ₹5 lakh | No new regime |
| FY 2016-17 (AY 2017-18) | ₹5,000, up to ₹5 lakh | No new regime |
| FY 2017-18 and FY 2018-19 (AY 2018-19 and AY 2019-20) | ₹2,500, up to ₹3.5 lakh | No new regime |
| FY 2019-20 (AY 2020-21) | ₹12,500, up to ₹5 lakh | No new regime |
| FY 2020-21 to FY 2022-23 (AY 2021-22 to AY 2023-24) | ₹12,500, up to ₹5 lakh | Same as old regime: ₹12,500, up to ₹5 lakh |
| FY 2023-24 and FY 2024-25 (AY 2024-25 and AY 2025-26) | ₹12,500, up to ₹5 lakh | ₹25,000, up to ₹7 lakh, with marginal relief |
| FY 2025-26 (AY 2026-27) | ₹12,500, up to ₹5 lakh | ₹60,000, up to ₹12 lakh, with marginal relief |
| FY 2026-27 (tax year 2026-27, 2025 Act) | ₹12,500, up to ₹5 lakh | ₹60,000, up to ₹12 lakh, with marginal relief |
- The new regime started in FY 2020-21 (AY 2021-22). Section 115BAC was added by the Finance Act, 2020. Until FY 2022-23, the new regime had the same rebate as the old one.
- Rebate u/s 87A for AY 2019-20: ₹2,500, only if total income was up to ₹3.5 lakh.
- Rebate u/s 87A for AY 2024-25: ₹25,000 up to ₹7 lakh in the new regime; ₹12,500 up to ₹5 lakh in the old regime. This is where "no tax up to ₹7 lakh" came from.
- Budget 2023 brought the ₹25,000 and ₹7 lakh figures (from FY 2023-24). Budget 2025 raised them to ₹60,000 and ₹12 lakh (from FY 2025-26). Budget 2024 and Budget 2026 did not change the amounts.
- Each row is from the version of section 87A that the Income Tax Department shows for that year, with its amendment notes.
How to claim the 87A rebate in your ITR
- No separate form. You claim it in the tax computation of your return, on the line "Rebate u/s 87A". Our reading: section 87A asks for no form or proof.
- The ITR forms check it. For AY 2026-27, the ITR-1 checks cap an old regime claim at ₹12,500 and block a new regime claim above ₹12,70,590 of total income (leaving out LTCG). The ITR-2 checks block a claim by an HUF or a non-resident.
- Choose your regime correctly. The new regime is the default. If you have no business income, you can pick the old regime with a return filed by the due date.
- If the rebate is cut: the Centralised Processing Centre sends an intimation under section 143(1) with a demand. See 143(1) intimation and demand.
- If TDS was cut but your tax is nil after the rebate, file a return to get the TDS back. See income tax refund status.
Frequently asked questions
Who is eligible for the 87A rebate?
A resident individual, of any age, whose total income is up to ₹12 lakh in the new regime or up to ₹5 lakh in the old regime. In the new regime, marginal relief also helps if total income is a little above ₹12 lakh.
Who is not eligible for the 87A rebate?
Non-residents, HUFs, firms, LLPs and companies. A resident individual is also not eligible if total income is above ₹5 lakh in the old regime, or above ₹12 lakh in the new regime beyond the marginal relief range.
How is section 87A rebate calculated with an example?
Work out tax at slab rates on your total income. If total income is within the limit, the rebate is the lower of that tax and the cap. Example, new regime: total income ₹11,25,000, tax ₹52,500, rebate ₹52,500, tax payable nil.
What is a 60k rebate in the new tax regime?
It is the section 87A rebate of up to ₹60,000 for FY 2025-26 and FY 2026-27. It applies when total income is ₹12 lakh or less, and it cancels the new regime tax on that income.
What is a 75000 rebate in the new tax regime?
There is no ₹75,000 rebate. ₹75,000 is the standard deduction on salary or pension in the new regime. It cuts your income, and the 87A rebate then cuts the tax.
Is income up to ₹12.75 lakh tax-free?
Yes, if it is salary or pension and you use the new regime. The ₹75,000 standard deduction brings ₹12.75 lakh down to ₹12 lakh of total income, and the 87A rebate cancels the tax on that. Other income, such as interest or rent, gets no standard deduction.
Is rebate under section 87A available for short-term capital gain?
In the new regime, from FY 2025-26, no: tax on STCG under section 111A is not covered. In the old regime, the rebate can cover 111A tax if total income is up to ₹5 lakh. Tax on LTCG under section 112A is not covered in either regime.
Why is the 87A rebate not applicable?
Three reasons: total income above the limit, not a resident individual, or the tax is on income taxed at special rates. Check each one against the limits on this page.
Is there a change in the section 87A rebate for FY 2026-27?
No change in amounts. From tax year 2026-27 the rebate is in section 156 of the Income-tax Act, 2025: up to ₹60,000 up to ₹12 lakh (new regime) and up to ₹12,500 up to ₹5 lakh (old regime).
What is the basic exemption limit in the new tax regime 2026-27?
₹4 lakh, at every age. With the 87A rebate, though, no tax is payable up to ₹12 lakh of total income.
How is marginal relief calculated for AY 2026-27?
Find the income above ₹12 lakh. Your tax before cess cannot be more than that amount. Example: total income ₹12,50,000, slab tax ₹67,500, income above ₹12 lakh ₹50,000, so tax is ₹50,000 plus 4% cess, ₹52,000.
Can an HUF claim the 87A rebate?
No. Only an individual who is resident in India can claim it.
What was the 87A rebate for AY 2024-25?
New regime: up to ₹25,000 if total income was up to ₹7 lakh, with marginal relief above that. Old regime: up to ₹12,500 if total income was up to ₹5 lakh.
Hinglish mein sawaal
87A rebate kya hai?
Section 87A ek tax rebate hai jo resident individual ka tax kam karta hai. New regime mein ₹12 lakh tak ki total income par ₹60,000 tak ka rebate milta hai, isliye tax zero ho jata hai. Old regime mein ₹5 lakh tak ki income par ₹12,500 tak milta hai.
Kya 87A rebate short term capital gain par milta hai?
New regime mein FY 2025-26 se nahi: 111A wale STCG aur 112A wale LTCG ka tax rebate se kam nahi hota. Old regime mein 111A STCG par rebate mil sakta hai, agar total income ₹5 lakh tak hai.
Not sure if your rebate is right, or which regime gives lower tax? A CA can check it and file your return. See ITR filing with a CA.
Last reviewed: 11 October 2026
FilingSetu is the brand of ANR Consultancy, a partnership firm.
GSTIN: 07ACOFA0324K1ZG
This page explains the law as it stands on the review date. It is not advice on your specific case.
