Rebate under Section 87A — Calculator with Marginal Relief
Section 87A is the reason a resident individual earning ₹12 lakh under the new regime pays no income tax. It is a rebate — a reduction of the tax itself, not of income — available only to resident individuals whose total taxable income is within the prescribed limit. This calculator shows the rebate for any year and regime, and demonstrates how marginal relief works when income is just above the limit.
Rebate limits by year
- Old regime (all years): taxable income ≤ ₹5,00,000 → rebate up to ₹12,500 (no marginal relief)
- New regime FY 2023-24 and FY 2024-25: income ≤ ₹7,00,000 → rebate up to ₹25,000, with marginal relief
- New regime FY 2025-26 onwards: income ≤ ₹12,00,000 → rebate up to ₹60,000, with marginal relief
Because salaried taxpayers also get a ₹75,000 standard deduction, salary of ₹12,75,000 becomes effectively tax-free in the new regime from FY 2025-26.
How marginal relief works
Without relief, earning ₹1 above ₹12 lakh would trigger the full ₹61,500 slab tax. Marginal relief limits the tax to the amount by which income exceeds ₹12 lakh. The relief phases out at roughly ₹12,70,000, after which normal slab tax applies.
Worked example
Taxable income ₹12,10,000 (new regime, FY 2025-26). Slab tax = 20,000 + 40,000 + 1,500 = ₹61,500. Income exceeds the limit by ₹10,000, so tax is restricted to ₹10,000 and the rebate is ₹51,500. Add 4% cess → total tax ₹10,400 instead of ₹63,960.
Important restrictions
- Not available to non-residents, HUFs, firms or companies.
- Not available against LTCG on equity u/s 112A; from FY 2025-26 not available against any special-rate income (STCG u/s 111A, lottery winnings, etc.) in the new regime.
- The limit is tested on total income after all deductions, including special-rate income.
Use this alongside the Income Tax Calculator to see the rebate's effect on your full computation.
Frequently Asked Questions
Is income up to ₹12 lakh completely tax free?
For resident individuals under the new regime from FY 2025-26, normal-rate income up to ₹12 lakh attracts a rebate of the full tax (max ₹60,000), so no tax is payable. Capital gains taxed at special rates do not get the rebate.
What if my income is ₹12,50,000?
Slab tax would be ₹67,500 but marginal relief caps tax at ₹50,000 (the excess over ₹12 lakh), plus 4% cess = ₹52,000. The relief ends around ₹12.7 lakh.
Does the old regime have marginal relief for 87A?
No. In the old regime, if taxable income exceeds ₹5,00,000 even by ₹1, the entire rebate of ₹12,500 is lost and full slab tax applies.
Can NRIs claim rebate u/s 87A?
No. The rebate is available only to individuals who are resident in India for the relevant year.
Disclaimer: This tool is for general information and estimation only. Tax rates and rules change — verify with official sources or a professional before acting. Read full disclaimer.