Section 87A

Section 87A of the Income Tax Act provides a tax rebate — not a deduction — to resident individual taxpayers whose total taxable income stays below a specified threshold. A rebate directly reduces your computed tax liability rupee-for-rupee, which is why Section 87A is the reason a salaried professional earning up to ₹12 lakh can effectively pay zero tax under the new regime.

Under the new tax regime for FY 2026-27, the rebate is up to ₹60,000 — zeroing out tax for anyone with taxable income up to ₹12 lakh (₹12.75 lakh for salaried after the ₹75,000 standard deduction). Above this ceiling, the rebate phases out. Under the old regime, 87A gives a smaller rebate of ₹12,500, available only up to ₹5 lakh of taxable income. Example: taxable income ₹11.8 lakh under new regime → tax before rebate ≈ ₹60,000, rebate ₹60,000, net tax zero.

Marginal relief is built in so that earning ₹1 above the threshold does not create a large tax cliff. NRIs are not eligible — only resident individuals. The rebate is claimed in your ITR automatically; no separate form.

Use our income tax calculator to see your net liability under both regimes with 87A applied — the result often decides whether the old or new regime is better for you.