What the rebate does in FY 2026-27
| New regime | Old regime | |
|---|---|---|
| Total-income limit | ₹12,00,000 | ₹5,00,000 |
| Maximum rebate | ₹60,000 | ₹12,500 |
| Tax payable up to the limit | ₹0 (residents) | ₹0 up to ₹5,00,000 after the ₹12,500 rebate covers the slab tax* |
| Residency | Residents only | Residents only |
* Old-regime slab tax at ₹5,00,000 is ₹12,500, which the ₹12,500 rebate cancels exactly.
Marginal relief between ₹12,00,000 and ₹12,75,000
Crossing ₹12,00,000 used to mean the rebate vanished entirely and the slab tax fell on your head. Faced with that cliff, the law grants marginal relief: the increase in tax over what you would owe at exactly ₹12 lakh cannot exceed the income earned above the limit.
The window closes at ₹12,75,000, where the slab tax of ₹71,250 equals the ₹75,000 excess. Every number between is the excess income plus 4% cess, rounded under section 288B.
| Total income (new regime) | Slab tax | Marginal relief | Tax payable |
|---|---|---|---|
| ₹12,00,000 | ₹60,000 | Via rebate: −₹60,000 | ₹0 |
| ₹12,10,000 | ₹61,500 | −₹51,500 | ₹10,400 |
| ₹12,25,000 | ₹63,750 | −₹38,750 | ₹26,000 |
| ₹12,75,000 | ₹71,250 | −₹0 (relief window exhausted) | ₹74,100 |
At ₹12,10,000 of total income the slab tax is ₹61,500 — ₹63,960 with cess — without relief. With marginal relief the tax is ₹10,000 and the 4% cess makes it ₹10,400 at final rounding. Test your own salary in the calculator.
Old-regime rebate
The old regime keeps the ₹12,500 rebate up to ₹5,00,000 of total income. Because the old slabs charge ₹12,500 at ₹5,00,000 exactly, the rebate zeroes tax there and only there — one rupee of extra income above ₹5,00,000 costs ₹20% marginal slab tax plus cess immediately: ₹12,502 of slab tax plus ₹500 cess becomes ₹13,000 payable at ₹5,00,010.
Frequently asked questions
Who can claim the Section 87A rebate?
Resident individuals only. The rebate is not available to non-residents, firms or companies. The new-regime rebate applies when total income is at most ₹12,00,000; the old-regime rebate applies at most ₹5,00,000.
How much tax is zero under the new regime?
Tax payable is zero anywhere up to ₹12,00,000 of total income for residents, because the ₹60,000 rebate covers the entire slab tax in that range.
What happens just above ₹12 lakh?
Marginal relief. The increase in tax is capped at the increase in income above the ₹12,00,000 limit, so the bill climbs one rupee per extra rupee earned until it re-joins the slab table at ₹12,75,000. At ₹12,25,000 the liability is ₹26,000, not ₹63,750 plus cess.
Does the rebate apply to special-rate income?
The rebate applies where special rates such as capital-gains rates apply, but the marginal-relief window considers the rebate limit against total income. This calculator's estimate covers slab-rate income only, so it shows the straightforward case.
Is the rebate automatic?
You claim it when you file, but the calculator applies it automatically wherever the income condition is met, and shows it as a line item so you can see the arithmetic.