Section 87A Rebate

Unlike a deduction (which reduces taxable income before tax is calculated), a rebate is subtracted directly from the tax amount itself, after it's computed - if the rebate fully covers the computed tax, the result is zero tax payable. Under the new regime, the rebate effectively makes income up to ₹12 lakh tax-free (before other benefits like the standard deduction push the real tax-free threshold slightly higher - see our Old vs. New Tax Regime article). Under the old regime, the equivalent rebate is smaller, covering income only up to ₹5 lakh.

(Figures checked as of September 2026, FY 2026-27; unchanged under the 2026 Budget. Note: Section 87A is the familiar Income-tax Act, 1961 number - the Income-tax Act, 2025 renumbers this as Section 156 from 1 April 2026, though the rebate amount and threshold are unchanged.)