ITR filing: How to pay zero tax under new and old tax regime - know all about Section 87A rebate
Under the new income tax regime, individuals with total income up to Rs 12 lakh can claim a rebate of up to Rs 60,000. (AI
Under the new income tax regime, individuals with total income up to Rs 12 lakh can claim a rebate of up to Rs 60,000. (AI image) What is rebate under Section 87A? Under the new income tax regime, individuals with total income up to Rs 12 lakh can claim a rebate of up to Rs 60,000. This results in zero or no tax liability. Under the old tax regime, a rebate of up to Rs 12,500 is available for individuals with taxable income up to Rs 5 lakh.
Marginal relief for taxpayers under new tax regime Let’s understand this better with the help of some examples and income levels Particulars Illustration 1 Illustration 2 Illustration 3 Illustration 4 Illustration 5 Regime Old regime New Regime New Regime New Regime Gross Total Income 7,00,000 7,45,000 12,75,000 12,77,000 13,45,588 Deductions/Exemptions* 2,00,000 1,50,000 75,000 Total Taxable Income 5,00,000 5,45,000 12,00,000 12,02,000 12,70,588 Tax before cess 12,500 21,500 60,000 60,300 70,588 Less: Rebate u/s 87A 12,500 60,000 58,300 Tax before cess 21,500 NIL 2,000 (after marginal relief) 70,588 (marginal relief not available) *includes standard deduction of Rs 50,000 and section 80C deductions of Rs 1.5 lakh totaling to Rs 2 lakh under the old tax regime and standard deduction of Rs 75,000 for new tax regime.
These illustrations apply for Financial Year 2025-26 (Assessment Year 2026-27). Some quick points to note in this regard are Under the new income tax regime, the rebate is not available on income taxed at special rates such as capital gains or winning from lotteries. Under the old tax regime, the rebate can be claimed against tax on the total income, except for long-term capital gains arising from transfer of equity shares, units of equity-oriented fund or business trust as provided under Section 112A of the Act.
Section 87A of the Income Tax Act, 1961 has been replaced by Section 156 of the Income Tax Act, 2025 with effect from 1 April 2026. This will be applicable for FY 2026-27.
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