Glossary term
Section 87A
Tax rebate that makes income tax zero for low-mid earners. FY 2025-26 New Regime: full rebate up to ₹12 lakh taxable.
Section 87A is a tax rebate (not deduction) that cancels the income tax payable for taxpayers below a threshold. Under the FY 2025-26 New Regime, taxpayers with taxable income up to ₹12 lakh get full rebate — meaning a salaried earner up to ₹12.75 lakh gross pays no tax.
Under the Old Regime, the rebate kicks in only up to ₹5 lakh of taxable income. 87A is the single biggest reason the New Regime has become the default for most salaried Indians.
See also