Section 87A Rebate: Pay ₹0 Tax Under ₹12L Income?
If your total taxable income is under ₹12 lakh in FY2025-26, you may pay zero income tax under the new tax regime thanks to the Section 87A rebate. Here is who qualifies, how much you save, and what to check before filing your ITR.
₹60,000 saved in tax = 400 cups of chai every single day for a year ☕
Your total tax saved if you qualify for the Section 87A rebate this year
Key Takeaways
Calculate your net taxable income after all deductions before assuming you qualify — income above ₹12 lakh (new regime) or ₹5 lakh (old regime) means zero rebate.
Check whether any special-rate income like short-term or long-term capital gains pushes your total beyond the rebate threshold before filing your ITR for AY2026-27.
Choose your tax regime carefully on your ITR form — the 87A rebate limit differs between old and new regimes and you cannot switch after filing without penalties.
If your total taxable income is under ₹12 lakh in FY2025-26, you may pay zero income tax under the new tax regime thanks to the Section 87A rebate. Here is who qualifies, how much you save, and what to check before filing your ITR.
Here's what happened: Under the new tax regime for FY2025-26, taxpayers with net taxable income up to ₹12 lakh get a full Section 87A rebate of up to ₹60,000, making their tax liability zero.. The old tax regime still carries a Section 87A rebate of up to ₹12,500, applicable only if net taxable income does not exceed ₹5 lakh.. Special incomes like capital gains taxed at special rates (e.g., STCG under Section 111A or LTCG under Section 112A) are excluded from the rebate calculation — you still owe tax on those..
What you should do: Calculate your net taxable income after all deductions before assuming you qualify — income above ₹12 lakh (new regime) or ₹5 lakh (old regime) means zero rebate.. Check whether any special-rate income like short-term or long-term capital gains pushes your total beyond the rebate threshold before filing your ITR for AY2026-27.. Choose your tax regime carefully on your ITR form — the 87A rebate limit differs between old and new regimes and you cannot switch after filing without penalties..
Even if your gross salary crosses ₹12 lakh, NPS contributions under Section 80CCD(2) in the new regime can bring net taxable income below ₹12 lakh and restore your full ₹60,000 rebate.
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- [1]“Income-tax returns: How much rebate can you claim under Section 87A? Eligibility and rules explained” mint - money · 28 Jun 2026
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