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Under the caller income taxation regime, individuals with full income up to Rs 12 lakh tin assertion a rebate of up to Rs 60,000. (AI image)
ITR filing FY 2025-26: Before filing your income taxation return, it is important to beryllium alert of the applicable income taxation rates and slabs nether some the caller and the aged income taxation regime.
This is peculiarly applicable for salaried taxpayers earning beneath a definite level of income - what if your wage is applicable for ‘zero tax’?The limits for ‘zero tax’ alteration arsenic per the income taxation authorities you opt for. It’s besides important to cognize that this is antithetic from the basal taxation exemption limit. So however tin you assertion a ‘zero tax’? Here’s wherever the rebate nether Section 87A of the Income Tax Act comes in.
What is rebate nether Section 87A?
If you opt for the caller income taxation regime, past the income up to Rs 12 lakh is tax-free.
However, the basal exemption is Rs 4 lakh. Which means that if your income is accidental Rs 9 lakh, past you volition person to assertion eligibility for zero taxation liability.Also Read | ITR filing FY 2025-26: Can you power betwixt caller and aged income taxation authorities each year? This is wherever the rebate nether Section 87A comes in. It provides taxation alleviation to nonmigratory individuals whose full income is little than the prescribed limits. How does it work? Hitesh Sharma, Partner, Vialto Partners says that the taxation (before cess) is archetypal calculated according to the applicable taxation rates and past reduced by the rebate disposable nether conception 87A.
- Under the caller income taxation regime, individuals with full income up to Rs 12 lakh tin assertion a rebate of up to Rs 60,000. This results successful zero oregon nary taxation liability.
- Under the aged taxation regime, a rebate of up to Rs 12,500 is disposable for individuals with taxable income up to Rs 5 lakh.
Marginal alleviation for taxpayers nether caller taxation regime
Additionally, nether the caller taxation regime, isolated from the rebate disposable for income up to Rs 12 lakh, marginal alleviation provides extortion to individuals whose income somewhat exceeds this limit.“Marginal alleviation ensures that if the income goes supra Rs 12 lakh, the taxation payable is constricted to the magnitude by which the income exceeds Rs 12 lakh. This marginal alleviation is disposable lone if the full taxable income is little than Rs 12,70,588,” Hitesh Sharma tells TOI.Let’s recognize this amended with the assistance of immoderate examples and income levels:
| Particulars | Illustration 1 | Illustration 2 | Illustration 3 | Illustration 4 | Illustration 5 |
| Regime | Old regime | Old regime | New Regime | New Regime | New Regime |
| Gross Total Income | 7,00,000 | 7,45,000 | 12,75,000 | 12,77,000 | 13,45,588 |
| Deductions/Exemptions* | 2,00,000 | 1,50,000 | 75,000 | 75,000 | 75,000 |
| Total Taxable Income | 5,00,000 | 5,45,000 | 12,00,000 | 12,02,000 | 12,70,588 |
| Tax earlier cess | 12,500 | 21,500 | 60,000 | 60,300 | 70,588 |
| Less: Rebate u/s 87A | 12,500 | - | 60,000 | 58,300 | - |
| Tax earlier cess | - | 21,500 | NIL | 2,000 (after marginal relief) | 70,588 (marginal relief not available) |
*includes modular deduction of Rs 50,000 and conception 80C deductions of Rs 1.5 lakh totaling to Rs 2 lakh nether the aged taxation authorities and modular deduction of Rs 75,000 for caller taxation regime. These illustrations use for Financial Year 2025-26 (Assessment Year 2026-27).Some speedy points to enactment successful this respect are:
- Under the caller income taxation regime, the rebate is not disposable connected income taxed astatine peculiar rates specified arsenic superior gains oregon winning from lotteries.
- Under the aged taxation regime, the rebate tin beryllium claimed against taxation connected the full income, but for semipermanent superior gains arising from transportation of equity shares, units of equity-oriented money oregon concern spot arsenic provided nether Section 112A of the Act.
- Section 87A of the Income Tax Act, 1961 has been replaced by Section 156 of the Income Tax Act, 2025 with effect from 1 April 2026. This volition beryllium applicable for FY 2026-27.
Also Read | ITR filing FY 2025-26: What documents are required to record your income taxation return? Quick checklist
