Section 87A Tax Rebate for FY 2026-27 Explained
Quick Answer
For FY 2026-27, the Section 87A rebate makes your income effectively tax-free if your net taxable income is up to ₹12 lakh under the New Tax Regime (maximum rebate of ₹1,00,000) or up to ₹5 lakh under the Old Tax Regime (maximum rebate of ₹12,500).
What is Section 87A Rebate?
Section 87A is a tax incentive designed to provide relief to low and middle-income taxpayers in India. Instead of being a deduction from income, it is a direct rebate from the final tax amount calculated on your taxable income.
If your total taxable income is below the specified threshold, your tax liability is reduced by the rebate amount, often resulting in zero tax payable.
Thresholds for FY 2026-27
The rebate amount differs significantly between the two regimes:
- New Tax Regime: The rebate is available if your net taxable income does not exceed ₹12,00,000. The maximum rebate is ₹1,00,000. This is the biggest draw of the New Regime for the middle class.
- Old Tax Regime: The rebate is available only if your net taxable income does not exceed ₹5,00,000. The maximum rebate is ₹12,500.
Note: Net taxable income is calculated after all deductions (like 80C, 80D, HRA) have been subtracted from your gross income.
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