Last Updated: June 2026 — FY 2025-26 (AY 2026-27)
Section 87A of the Income Tax Act provides a tax rebate that reduces your income tax liability to zero if your total income is within the specified limit. This is one of the most beneficial provisions for middle-income taxpayers in India.
Section 87A Rebate for FY 2025-26 (AY 2026-27)
| Detail | New Tax Regime | Old Tax Regime |
|---|---|---|
| Maximum Rebate Amount | Rs. 60,000 | Rs. 12,500 |
| Income Limit for Rebate | Up to Rs. 12,00,000 | Up to Rs. 5,00,000 |
| Effective Zero-Tax Limit | Rs. 12,00,000 (Rs. 12,75,000 for salaried) | Rs. 5,00,000 |
What Changed? History of Section 87A Rebate
| Financial Year | Rebate Amount | Income Limit |
|---|---|---|
| FY 2013-14 to FY 2015-16 | Rs. 2,000 | Up to Rs. 5,00,000 |
| FY 2016-17 to FY 2018-19 | Rs. 5,000 | Up to Rs. 3,50,000 |
| FY 2019-20 onwards (Old Regime) | Rs. 12,500 | Up to Rs. 5,00,000 |
| FY 2025-26 (New Regime) | Rs. 60,000 | Up to Rs. 12,00,000 |
How Section 87A Works – Example
Under New Tax Regime (FY 2025-26):
- Gross Salary: Rs. 12,00,000
- Less: Standard Deduction: Rs. 75,000
- Net Taxable Income: Rs. 11,25,000
- Tax as per new slabs: Rs. 60,000
- Less: Section 87A Rebate: Rs. 60,000
- Tax Payable = Zero
Under Old Tax Regime (FY 2025-26):
- Total Income up to Rs. 5,00,000: Tax = Rs. 12,500
- Less: Section 87A Rebate: Rs. 12,500
- Tax Payable = Zero
Who is Eligible for Section 87A Rebate?
- Must be a resident individual (not HUF, firm, or company)
- Total income must be within the specified limit before the rebate
- NRIs are not eligible for this rebate
- Available to both salaried and non-salaried individuals
Important Note on Special Rate Income
Section 87A rebate is not available on tax payable on:
- Long-term capital gains (LTCG) under Section 112A (equity shares/mutual funds) exceeding Rs. 1.25 lakh
- Short-term capital gains (STCG) under Section 111A
- Special rate income under Sections 115A, 115AB, etc.
Need Help Claiming Your 87A Rebate?
Our CAs at IncomeTaxReturnIndia.com ensure you claim the correct rebate and file your ITR accurately. Don’t miss out on this significant benefit — file your ITR before 31 July 2026.
Sir my earnings for the for the current financial year 2013-2014 is rupees 4,00,000/- whether i am eligible for tax rebate under U/s87A ?
Yes you are eligible for rebate under section 87A
I work in a PSU bank, my employer already deduct TDS on every month’s salary. Employer will directly give tax credit of Rs. 2000/-, or i have to file IT return to claim it?
Your employer while calculating income taxes will be taking care of the Section 87A. You will not required to claim refund for the same.
Sir,
I am a state government retired employee.
getting annual pension of Rs.557000/-
i am a senior citizen of 76years old eligible for Rs.300000/-
exemption
Taxable income Rs.257000/-
Deduct exemption claimed under 80c Rs.150000/-
—————
Net taxable income Rs.107000/-
Income tax at 10% Rs.10700/-
Deduct rebate under IT act under section 87A Rs.2000/-
————–
Tax to be paid Rs.8700/-
Add 3% educational cess Rs.261/-
————-
Total tax to be paid Rs.8961/-
OR Rs.8970/-
Kindly confirm above calculation and inform through my e-mail ID given above.
Thank you in anticipation;
With kind regards.