BooksIQResident individuals get a tax rebate under §87A. Under the OLD regime: ₹12,500 if total income ≤ ₹5,00,000. Under the NEW regime (§115BAC) for FY 2025-26: ₹60,000 if total income ≤ ₹12,00,000 (effectively making income up to ₹12L tax-free).
Key points
- Available only to a RESIDENT individual (not HUF, not non-residents).
- Computed as a tax rebate AFTER computing tax liability — the lower of the actual tax payable or the rebate ceiling.
- Under old regime: ₹12,500 ceiling kicks in when total income ≤ ₹5L;
- tax becomes nil for income up to ₹5L.
- Under new regime §115BAC: ₹25,000 was the ceiling for FY 2023-24 / 2024-25 (income ≤ ₹7L);
- Finance Act 2025 raised it to ₹60,000 for FY 2025-26 (income ≤ ₹12L).
- Marginal relief applies just above the threshold so the tax increase doesn't exceed the income increase.
- Not available on long-term capital gains taxed at special rates.
Reference: §87A, ITA 1961 — under ITA 2025 (FY 26-27 onwards), this is §156
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