Section 87A · Rebate of income tax for resident individuals
Earn up to ₹12 lakh under the new regime, pay zero tax.
- New regime threshold
- ₹12,00,000 income
- Old regime threshold
- ₹5,00,000 income
- Max rebate (new)
- Up to tax on ₹12,00,000
- Who
- Resident individuals only
In plain English
If you're a resident individual and your taxable income is within a small ceiling, the government simply waives off your tax. Under the new regime the threshold is ₹12,00,000; under the old regime it's ₹5,00,000.
| Meaning | Number |
|---|---|
| New regime threshold | ₹12,00,000 income |
| Old regime threshold | ₹5,00,000 income |
| Max rebate (new) | Up to tax on ₹12,00,000 |
How 87A actually works
- Resident individual — HUFs, firms and NRIs cannot claim it
- Income within threshold — ₹12L under new regime, ₹5L under old
- Rebate, not deduction — Reduces tax payable, not taxable income
- Marginal relief — Available just above the threshold under the new regime
What this section covers
Section 87A grants a rebate from income tax to resident individuals whose total income does not exceed a specified ceiling. Under the new regime (Section 115BAC, default from AY 2024-25), the rebate effectively makes income up to ₹12,00,000 tax-free; combined with the standard deduction of ₹75,000, salaried taxpayers pay zero tax on gross income up to ₹12,75,000. Under the old regime, the rebate threshold is ₹5,00,000. The rebate is not available to non-residents, HUFs or firms. Marginal relief is available where income marginally exceeds the threshold under the new regime so that the extra tax does not exceed the extra income.
The legal text
“An assessee, being an individual resident in India, whose total income does not exceed [the specified amount], shall be entitled to a deduction, from the amount of income-tax… on his total income with which he is chargeable for any assessment year, of an amount equal to hundred per cent of such income-tax or [the specified amount], whichever is less.”
Old Act vs New Act
| Aspect | Act, 1961 | Act, 2025 |
|---|---|---|
| Section | 87A | 156 |
| Topic | Rebate of income tax for resident individuals | |
| Verdict | Renumbered — concept retained | |
| Notes | Restated as Section 156 under the Income-tax Act, 2025. The rebate amounts, eligibility for resident individuals and marginal relief are retained. | |
Common confusion
The rebate is on TAX, not on income. If your tax before rebate is ₹0 (e.g. due to deductions taking income below the basic exemption), 87A adds nothing extra. Special-rate incomes like LTCG u/s 112A are excluded from the new-regime rebate.
Who should know this
Related sections
Based on the official Income-tax Act, 1961 and the published Income-tax Act, 2025 as available on the Income Tax Department website. Always verify against the published Act and consult a qualified professional.