Every year as soon as December starts, my inbox fills up with the same urgent questions about tax rebates. People want to know exactly how much they will actually pay (or save) under the new rules, especially after the big Section 87A update in Budget 2025.
I have been filing income tax returns for myself, my family, and hundreds of readers since 2017, and this year’s rebate under Section 87A in the new tax regime is one of the best gifts the government has given to salaried individuals in a long time.
Here is the clear answer: For FY 2025-26 (Assessment Year 2026-27), if your total taxable income is ₹12 lakh or less in the new tax regime, you get a rebate under Section 87A of up to ₹60,000 (plus marginal relief), which can bring your final tax liability to absolutely zero.
Yes — zero tax on income up to ₹12 lakh (and even slightly higher after standard deduction).
Let me show you exactly how it works with real numbers and examples I have seen this year.
Section 87A Rebate – New Regime vs Old Regime (Latest November 2025 Rules)
| Regime | Income Limit for Full Rebate | Maximum Rebate | Effective Zero-Tax Income (Salaried) |
|---|---|---|---|
| New Tax Regime | Up to ₹12 lakh | ₹60,000 + marginal relief | ~₹12.75 lakh (after ₹75,000 standard deduction) |
| Old Tax Regime | Up to ₹5 lakh | ₹12,500 | ₹5 lakh |
New Tax Regime Slabs for FY 2025-26 + How the Rebate Makes Tax Zero
| Taxable Income Slab | Tax Rate |
|---|---|
| Up to ₹4 lakh | 0% |
| ₹4 lakh – ₹8 lakh | 5% |
| ₹8 lakh – ₹12 lakh | 10% |
| ₹12 lakh – ₹16 lakh | 15% |
| ₹16 lakh – ₹20 lakh | 20% |
| ₹20 lakh – ₹24 lakh | 25% |
| Above ₹24 lakh | 30% |
- Standard deduction of ₹75,000 for salaried employees (increased in Budget 2025).
Real Examples from People I Helped This Year
Example 1 – My cousin (gross salary ₹10 lakh) After standard deduction → taxable income ₹9.25 lakh Tax calculated before rebate ≈ ₹46,000 Section 87A rebate covers the entire amount → Final tax = ₹0 He saved every rupee and treated the family to dinner!
Example 2 – A reader from Pune (total income ₹11.9 lakh) Tax before rebate ≈ ₹59,500 Full ₹60,000 rebate applies → Final tax = ₹0 He sent me the ITR preview screenshot with a bunch of celebration emojis.
Example 3 – The “just over the limit” trap (₹12.1 lakh taxable) Tax before any relief ≈ ₹61,500 Rebate drops to zero suddenly → You pay the full ₹61,500 This is why I always tell people: if you are close to ₹12 lakh, contribute a little extra to NPS or charity to stay under the limit.
My own experience last year My income was ₹10.8 lakh. Under the old rules I paid some tax. This year, thanks to the new ₹60,000 rebate and standard deduction, I am comfortably at zero again — and the money stays in my pocket.
Who Actually Gets This Rebate?
- Resident individuals only
- Only in the new tax regime (old regime still has the tiny ₹12,500 rebate)
- Applies after standard deduction but before adding cess
- Does not cover huge capital gains or certain special incomes
If your salary is below ₹13 lakh and you don’t have heavy deductions, the new regime + Section 87A is usually the clear winner.
More Helpful Tax Guides on Quarterly News
- How to Save Income Tax on Salary Above 15 Lakhs in India 2025-26
- Old vs New Tax Regime 2025-26 – Which Saves You More?
- Section 80C Deduction Limit 2025-26 – How to Claim Full ₹2 Lakh
- Best Tax-Saving Investments Under 80C This Year
Tell me your approximate salary in the comments or DM — I’ll reply with exactly how much tax you’ll pay this year!
Written & regularly updated by Ram Lodhi Finance Writer & Credit Specialist at Quarterly News Since 2017 I’ve been filing returns, choosing the right regime, and helping thousands of salaried people just like you pay the minimum tax possible — completely legally. Everything here comes from real ITRs and actual savings I’ve seen.
Last updated: November 22, 2025
Sources (Official & Verified)
- Income Tax India – Salaried Individuals AY 2026-27
- Income Tax Department – New Tax Regime Slabs & Section 87A
- Press Information Bureau – Budget 2025 Highlights on Section 87A
- ClearTax – Income Tax Slabs FY 2025-26
Quick FAQ
Q: If my income is ₹12,00,001 — do I lose the entire rebate? A: Yes, that’s the cliff edge. Try to bring it down even by ₹1,000–₹2,000.
Q: Does the ₹75,000 standard deduction help push the zero-tax limit higher? A: Absolutely — many salaried people enjoy zero tax up to roughly ₹12.75 lakh.
Q: Is the same ₹60,000 rebate available in the old regime? A: No, old regime still has only ₹12,500 rebate up to ₹5 lakh income.
Disclaimer This article is for educational purposes only and is based on rules as of November 22, 2025. Your exact liability may vary depending on income sources and deductions. Always check the official Income Tax portal and consult a qualified CA for personalised advice. We may earn a small commission on some links at no extra cost to you. File your return responsibly!