Let me share what is 87A rebate in income tax? Section 87A of the Indian Income Tax Act offers a rebate that directly reduces your tax liability effectively lowering your final tax payment to zero if you qualify. The rebate differs depending on whether you follow the old or new tax regime.
What is Rebate 87A?
Under the old tax regime, resident individuals with total taxable income up to Rs. 5 lakh can claim a maximum rebate of Rs. 12,500 or the total tax payable, whichever is lower, thus nullifying any small tax liability.
The new tax regime has become more generous. For FY 2025‑26 (AY 2026‑27), individuals with taxable income up to Rs. 12 lakh qualify for a rebate of up to Rs. 60,000, effectively making tax payable zero for incomes within this threshold.
Previously, the limit was Rs. 7 lakh with a Rs. 25,000 rebate in FY 2024‑25.
The rebate applies to tax computed before adding the 4% health and education cess, and is subtracted from your total tax due not from taxable income. It is available only to resident individuals, not to NRIs or entities.
To claim it, calculate your total income, subtract deductions (under Chapter VI-A in the old regime), compute tax per applicable slab (old or new), then apply the rebate. If the rebate covers it, your tax becomes zero.
Example (New Regime): Taxable income = Rs12 lakh → Tax before rebate = Rs. 60,000 → Rebate = Rs. 60,000 → Final tax = Rs. 0.
In short, Section 87A helps low- to middle-income residents avoid tax altogether under both regimes.
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What Is 87a Rebate In Income Tax?
sunny6
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2025-06-19T15:53:58+00:00 2025-07-02T18:17:45+00:00Comment
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