Section 87A Rebate and Marginal Relief Calculator
The 87A rebate can wipe out your tax entirely. In the new regime, income up to ₹12,00,000 pays no tax thanks to a rebate of up to ₹60,000 — and a marginal-relief cushion protects you just above that. In the old regime the rebate is up to ₹12,500 for income up to ₹5,00,000. Enter your taxable income below to see your rebate, any marginal relief and the final tax. Figures apply for FY 2025-26 and FY 2026-27.
New regime rebate
₹60,000
income up to ₹12,00,000
Old regime rebate
₹12,500
income up to ₹5,00,000
Marginal relief
New regime
just above ₹12 lakh
Applies for
FY 25-26 / 26-27
same figures both years
How the 87A rebate works
Section 87A gives a rebate — a direct reduction of tax — to resident individuals whose income is within a threshold. If your tax is within the rebate amount, it is fully cancelled and you pay nothing. The two regimes have very different thresholds.
New (default) regime
- Rebate up to ₹60,000
- Full rebate if total income is up to ₹12,00,000
- A salaried person gets the ₹75,000 standard deduction on top, so salary up to about ₹12,75,000 can be tax-free
- Marginal relief applies just above ₹12 lakh
Old regime
- Rebate up to ₹12,500
- Full rebate if total income is up to ₹5,00,000
- No marginal relief — a hard cut-off at ₹5 lakh
- Useful mainly for those claiming large deductions
Marginal relief — the cushion above ₹12 lakh
Without relief, earning even ₹1 above ₹12,00,000 in the new regime would suddenly cost you about ₹60,000 in tax, because the rebate disappears. Marginal relief prevents this: your tax cannot be more than the amount by which your income exceeds ₹12,00,000. So at an income of ₹12,10,000 you pay only about ₹10,000, not ₹61,500. The relief tapers off and stops at around ₹12,70,000, beyond which normal tax is lower than the extra income and applies in full.
| Taxable income (new regime) | Tax before relief | Tax after 87A / relief |
|---|
| ₹12,00,000 | ₹60,000 | Nil (full rebate) |
| ₹12,10,000 | ₹61,500 | ₹10,000 + cess |
| ₹12,50,000 | ₹67,500 | ₹50,000 + cess |
| ₹12,70,000 | ₹70,500 | ₹70,000 + cess (relief nearly gone) |
| ₹13,00,000 | ₹75,000 | ₹75,000 + cess (no relief) |
Old Act 1961 vs new Act 2025
The rebate continues under the Income-tax Act, 2025 with the same figures — up to ₹60,000 for income to ₹12,00,000 in the new regime and ₹12,500 for income to ₹5,00,000 in the old regime — for both FY 2025-26 and FY 2026-27. The section reference is renumbered under the new Act; confirm the live reference on the income-tax portal before filing.
A worked example
Two colleagues in the new regime (FY 2026-27)
| Anita — taxable income ₹12,00,000 | Nil tax |
| Ravi — taxable income ₹12,10,000 | ₹10,400 |
| Difference in income | ₹10,000 |
| Difference in tax (thanks to marginal relief) | ₹10,400 |
Anita pays nothing because her income is within ₹12 lakh. Ravi earns ₹10,000 more, and marginal relief limits his extra tax to that ₹10,000 (plus 4% cess), instead of the ₹61,500 he would otherwise owe. Without marginal relief, earning a little more would have left him worse off.
Related tools and guides
Frequently asked questions
Is income up to ₹12 lakh really tax-free?
In the new regime, yes — for FY 2025-26 and FY 2026-27, tax on a taxable income of up to ₹12,00,000 is fully cancelled by the 87A rebate of up to ₹60,000, so you pay nothing. A salaried person also gets the ₹75,000 standard deduction, so a salary of up to about ₹12,75,000 can end up tax-free. This applies only to normal-slab income, not to special-rate capital gains.
What is marginal relief?
Marginal relief ensures that earning slightly more than ₹12,00,000 does not cost you far more in tax. Your tax cannot exceed the amount by which your income crosses ₹12,00,000. So at ₹12,10,000 you pay about ₹10,000 rather than ₹61,500. The relief reduces as income rises and disappears around ₹12,70,000.
Does the 87A rebate apply in the old regime?
Yes, but with a much lower threshold. In the old regime the rebate is up to ₹12,500 and applies only if your total income is up to ₹5,00,000. There is no marginal relief in the old regime, so at ₹5,00,001 the full tax applies.
Can I claim the rebate on capital gains?
No, not on special-rate capital gains. The 87A rebate is not available against tax on short-term capital gains under Section 111A or long-term capital gains under Section 112A. If part of your income is such capital gains, the rebate applies only to the tax on your normal-slab income, and the capital-gains tax is payable separately.
Is the rebate available to non-residents?
No. The Section 87A rebate is available only to resident individuals. Non-residents and other taxpayers such as HUFs, firms and companies cannot claim it.
Do these figures change for FY 2026-27?
No. The rebate of up to ₹60,000 for income to ₹12,00,000 (new regime) and ₹12,500 for income to ₹5,00,000 (old regime), and the marginal-relief mechanism, apply to both FY 2025-26 and FY 2026-27, and continue under the Income-tax Act, 2025.
This page is a general guide for individual taxpayers and is not tax advice. The rebate, slabs and marginal relief depend on your residential status and the nature of your income; special-rate incomes are treated differently. Figures apply for FY 2025-26 and FY 2026-27 and continue under the Income-tax Act, 2025 (in force from 1 April 2026). Verify the current position on the income-tax portal or with your advisor before filing.
