Section 87A rebate FY 2026-27: the ₹60,000 rebate, ₹12 lakh limit and marginal relief

Bottom line: Under the new regime, a resident individual pays zero tax up to ₹12,00,000 of taxable income in FY 2026-27, thanks to the enhanced Section 87A rebate of ₹60,000.

1. How the rebate works
If your total income (other than special-rate incomes) is up to ₹12,00,000, the rebate cancels the entire tax. For a salaried person the effective nil-tax point is ₹12,75,000, after the ₹75,000 standard deduction.

2. Marginal relief
Just above ₹12,00,000, marginal relief caps your tax so the extra tax never exceeds the income above ₹12 lakh. It tapers off by about ₹12.75 lakh.

3. Two limits to note
The rebate does not apply to income taxed at special rates (STCG under 111A, LTCG under 112A). Under the old regime the rebate stays ₹12,500 up to ₹5,00,000.

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