Section 87A Rebate Calculator — Old (₹12,500) & New (₹60,000) Regime for FY 2025-26
Calculate your Section 87A tax rebate instantly under both regimes for FY 2025-26 (AY 2026-27). The old regime caps the rebate at ₹12,500 for income up to ₹5 lakh. Budget 2025 raised the new regime rebate to ₹60,000 for income up to ₹12 lakh, with marginal relief extending the benefit up to roughly ₹12.70 lakh of taxable income. The tool computes slab tax, applies the rebate, calculates marginal relief where applicable, and shows the final tax payable inclusive of the 4% health and education cess.
Calculate Your Section 87A Rebate
Enter your total taxable income (after deductions) and choose your tax regime. The tool applies the correct rebate, marginal relief if applicable, and shows the final tax payable.
Slab-wise Tax Computation
How Section 87A Rebate Works in Plain English
Section 87A is a direct tax credit, not a deduction. It does not reduce your taxable income — it reduces the tax you owe after slab rates have been applied. The mechanism is straightforward in three steps:
- Compute slab tax. Apply the slab rates of your chosen regime to your total taxable income.
- Apply the 87A rebate cap. The rebate is the lower of (a) the actual slab tax computed and (b) the regime ceiling — ₹12,500 under the old regime if income ≤ ₹5,00,000, or ₹60,000 under the new regime if income ≤ ₹12,00,000.
- Add cess. Health and education cess of 4 percent applies on the residual tax after rebate. If rebate fully extinguishes the tax, cess is also nil.
New Regime (Income ≤ ₹12,00,000): Rebate = min(Slab Tax, ₹60,000)
Final Tax = (Slab Tax − Rebate) + 4% Cess
Slab Rates Applied by This Calculator
Both regimes use the official slab structure for FY 2025-26 (AY 2026-27) as notified by the Central Board of Direct Taxes (CBDT). The new regime is the default; you must explicitly opt for the old regime in your ITR if you want to claim deductions like 80C and HRA.
CA Tip: Section 87A applies to tax computed at slab rates only. Capital gains taxed at special rates (Section 111A for STCG at 20%, Section 112A for LTCG at 12.5% above ₹1.25 lakh from 23 July 2024) and lottery income (Section 115BB at 30%) are excluded from the rebate. If you have such income, this calculator's rebate amount applies only to the portion of tax computed at slab rates.
Section 87A Under Old vs New Regime — Side by Side
The two regimes have very different rebate economics. The old regime offers a modest rebate that disappears beyond ₹5 lakh; the new regime offers a substantial rebate that, combined with marginal relief and standard deduction, makes salaried income up to ₹13.45 lakh effectively tax-free.
| Parameter | Old Regime | New Regime |
|---|---|---|
| Income ceiling for rebate | ₹5,00,000 | ₹12,00,000 |
| Maximum rebate | ₹12,500 | ₹60,000 |
| Marginal relief above ceiling | Not available | Available up to ~₹12,70,588 |
| Standard deduction (salaried) | ₹50,000 | ₹75,000 |
| Effective tax-free salary (gross) | ₹5,50,000 | ₹13,45,588 (approx.) |
| Deductions allowed (80C, 80D, etc.) | Yes | Mostly no (limited to 80CCD(2), 80JJAA) |
| Default for FY 2025-26 | Optional, must opt in | Default regime |
FY 2025-26 New Regime Slabs (Budget 2025)
| Income Slab | Tax Rate |
|---|---|
| Up to ₹4,00,000 | Nil |
| ₹4,00,001 – ₹8,00,000 | 5% |
| ₹8,00,001 – ₹12,00,000 | 10% |
| ₹12,00,001 – ₹16,00,000 | 15% |
| ₹16,00,001 – ₹20,00,000 | 20% |
| ₹20,00,001 – ₹24,00,000 | 25% |
| Above ₹24,00,000 | 30% |
FY 2025-26 Old Regime Slabs (Individual Below 60)
| Income Slab | Tax Rate |
|---|---|
| Up to ₹2,50,000 | Nil |
| ₹2,50,001 – ₹5,00,000 | 5% |
| ₹5,00,001 – ₹10,00,000 | 20% |
| Above ₹10,00,000 | 30% |
Senior citizens (60-80) and super seniors (above 80) in the old regime have higher basic exemption limits of ₹3,00,000 and ₹5,00,000 respectively. The new regime offers no age-based concessions.
Marginal Relief — The Cliff That Was Made a Slope
Without marginal relief, earning even ₹1 above the ₹12 lakh threshold in the new regime would knock out the entire ₹60,000 rebate, creating an absurd cliff where a ₹1 raise costs you ₹60,000 in tax. Section 87A as amended by Budget 2025 explicitly preserves marginal relief to soften this transition.
The Mechanic
If your taxable income is X (where X > ₹12,00,000) and the slab tax computed on X is T, marginal relief caps your tax at the smaller of T and (X − ₹12,00,000). In effect, the additional tax payable can never exceed the additional income earned above the threshold.
Slab Tax (T) = computed on full taxable income
Tax Payable = min(T, E)
Marginal Relief = T − min(T, E)
Worked Examples — New Regime FY 2025-26
| Taxable Income | Slab Tax | Excess over ₹12L | Tax After Relief | Cess @ 4% | Total Payable |
|---|---|---|---|---|---|
| ₹12,00,000 | ₹60,000 | — | ₹0 (full rebate) | ₹0 | ₹0 |
| ₹12,10,000 | ₹61,500 | ₹10,000 | ₹10,000 (capped at excess) | ₹400 | ₹10,400 |
| ₹12,50,000 | ₹67,500 | ₹50,000 | ₹50,000 (capped at excess) | ₹2,000 | ₹52,000 |
| ₹12,70,000 | ₹70,500 | ₹70,000 | ₹70,000 (capped at excess) | ₹2,800 | ₹72,800 |
| ₹12,71,000 | ₹70,650 | ₹71,000 | ₹70,650 (slab tax lower) | ₹2,826 | ₹73,476 |
| ₹13,00,000 | ₹75,000 | — | ₹75,000 (no relief) | ₹3,000 | ₹78,000 |
The mathematical break-even is at ₹12,70,588 — beyond this, the slab tax is naturally lower than the excess over ₹12 lakh, so marginal relief becomes redundant. Salaried individuals with the ₹75,000 standard deduction effectively benefit up to gross salary of ₹13,45,588.
Note: Marginal relief applies only under the new regime in FY 2025-26. The old regime has no marginal relief for Section 87A — if your income is even ₹1 above ₹5,00,000, you lose the entire ₹12,500 rebate. This is one of several reasons the new regime is now the default for most salaried taxpayers per Ministry of Finance Budget 2025 announcements, with details available via PIB press releases.
Need Help Claiming Section 87A?
Patron's CAs verify your 87A eligibility, optimise across regimes, and file ITR with the rebate correctly claimed for AY 2026-27. We support Pune, Mumbai, Delhi, Gurugram and pan-India clients.
Who Qualifies for Section 87A Rebate
Section 87A is one of the most narrowly targeted reliefs in the Income Tax Act 1961. Only resident individuals qualify. Every other taxpayer category is excluded by construction. Patron Accounting's CAs, governed by the standards of the Institute of Chartered Accountants of India, recommend verifying eligibility against your residential status and income composition every year before filing.
Eligible
- Resident Individuals as defined under Section 6 of the Income Tax Act — must satisfy the 182-day or 60+365-day stay tests in India during the financial year.
- Senior citizens (60-80) and super senior citizens (above 80), provided they are residents. Higher basic exemption limits in the old regime mean the rebate may be moot for some, but eligibility remains intact.
- Salaried, self-employed, pensioners, freelancers — no occupation restriction. Anyone filing as an individual taxpayer with income within the threshold qualifies.
Not Eligible
- Non-Resident Indians (NRIs) and RNOR taxpayers — the residency test must be satisfied under Section 6.
- Hindu Undivided Families (HUFs), even if their income is below the threshold.
- Partnership firms, LLPs, AOPs, BOIs, companies — Section 87A is restricted to "individual" assessees only.
- Deemed residents earning above ₹15 lakh from Indian sources without tax liability elsewhere — the residency provisions of Section 6(1A) deny ordinary resident status; verify with a CA before claiming.
Income Components Excluded From Rebate
Even if you qualify by residency, the rebate does not cover tax on income taxed at special rates. These include long-term capital gains under Section 112 and 112A, short-term capital gains on listed equity under Section 111A, lottery and game show winnings under Section 115BB, virtual digital asset gains under Section 115BBH, and income from carbon credits under Section 115BBG. The rebate applies only to the slab-rate portion of your tax liability.
How to Claim Section 87A Rebate in Your ITR
The good news: Section 87A is auto-computed by the Income Tax e-filing portal once you enter your income and select the regime. There is no separate field, no separate schedule, no documentary evidence required.
- Log in to incometax.gov.in and start your ITR filing for AY 2026-27.
- Choose your tax regime at the start of the form. New regime is default; opt for old regime if it's beneficial after running scenarios. Salaried taxpayers can switch each year; business income earners face one-time switching restrictions.
- Enter all income heads — salary, house property, capital gains, business/profession, other sources. Also reconcile against AIS using our AIS Reconciliation Tool first.
- Enter deductions (only available under old regime — Chapter VI-A: 80C, 80D, 80G, 80E, 80TTA, etc.).
- Verify the Tax Computation Schedule. The portal shows "Tax Payable on Total Income" → "Rebate u/s 87A" → "Tax after Rebate". Cross-check the rebate amount matches what this calculator shows.
- Check marginal relief applicability. If your income is between ₹12,00,001 and ₹12,70,588 (new regime), the portal should automatically apply marginal relief. If not shown, recompute using this tool and raise a portal grievance.
- Submit and verify via Aadhaar OTP, net banking, or DSC. Always download the ITR-V and acknowledgement after submission.
If you missed claiming the rebate in an already-filed ITR, you can file a revised return under Section 139(5) before 31 December 2026 for AY 2026-27. For arithmetic errors on rebate computation by CPC, file a rectification under Section 154 — see our Section 154 rectification guide.