Section 87A Rebate Explained

How to Claim Income Tax Relief in FY 2025-26

Paying income tax is a responsibility, but the Indian government also provides several reliefs to ease the burden—especially for small taxpayers. One such benefit is the Section 87A rebate, which can significantly reduce or even eliminate your income tax liability if you meet certain conditions.

In this blog, we explain what Section 87A is, who is eligible, and how to claim this rebate for the financial year (FY) 2025–26.

✅ What is Section 87A?

Section 87A of the Income Tax Act, 1961 offers a rebate on the income tax payable by individual taxpayers. It is a direct reduction in tax liability, not on the taxable income. If your total income after deductions is below a specified limit, you can claim a rebate of up to ₹25,000.

This rebate is available under both the old and new tax regimes, but with different income limits.

📌 Section 87A Rebate Limits for FY 2025–26

💡 The rebate is applied after claiming deductions like 80C, 80D, and other exemptions (in old regime), or standard deduction (in new regime).

🧮 Example: How Rebate Works

🔹 Under New Regime:

• Gross income: ₹7,20,000

• Less Standard Deduction: ₹50,000

• Net taxable income: ₹6,70,000

• Tax before rebate: ₹23,400

• Since income is below ₹7,00,000, rebate of ₹23,400 applies

• Final tax payable = ₹0

🔹 Under Old Regime:

• Gross income: ₹5,40,000

• Less 80C & 80D deductions: ₹40,000

• Net taxable income: ₹5,00,000

• Tax before rebate: ₹12,500

• Since income is ₹5,00,000 or less, rebate of ₹12,500 applies

• Final tax payable = ₹0

🧾 Eligibility for Section 87A Rebate

To claim the rebate, you must:

1. Be a resident individual (not HUF or company)

2. Be a resident of India for tax purposes

3. Have total taxable income within the applicable limit:

   • ₹7,00,000 under new regime

   • ₹5,00,000 under old regime

4. File your income tax return (ITR) on time

❓ Frequently Asked Questions

Q1. Is Section 87A rebate automatic?
Yes, if you file your ITR properly and your income is within the limit, the rebate is auto-calculated.

Q2. Can senior citizens claim 87A rebate?
Yes. Any resident individual, including senior and super senior citizens, can claim the rebate if eligible.

Q3. Do I need to submit any separate form?
No. The rebate is claimed through your ITR filing, and no additional form is required.

Q4. Can I claim 87A in both regimes?
Yes, but income limits and rebate amounts differ between the old and new tax regimes.

Frequently Asked Questions