What is Section 87A Rebate?
The Section 87A rebate reduces your income tax liability to zero (up to a cap) if your taxable income falls below a specified threshold. For FY 2026-27, the threshold is ₹5,00,000 (rebate up to ₹12,500) under the old regime and ₹12,00,000 (rebate up to ₹60,000) under the new regime.
The rebate is applied after computing tax on the slabs but before adding surcharge and cess — so it can bring your base tax to exactly zero, but does not offset surcharge if your income is otherwise high enough to attract it (which it wouldn't be, given the rebate thresholds).
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