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Introduction Do you earn a salary and wonder how much tax you really need to pay under the new tax regime? The Tax Rebate U/s 87A in the New Tax Regimes as per the Budget 2025 has brought relief for millions of salaried individuals. With this rule correction, those earning up to Rs 12.75 lakh can n
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The Section 87A rebate allows individuals with a taxable income up to Rs 12.75 lakh under the new tax regime to have their income tax liability reduced to zero, provided their income doesn't include specific categories like short-term capital gains.
An enhanced standard deduction of Rs 75,000 is now available, which reduces your taxable salary income. This means your net taxable income is lower, making it easier to fall within the Rs 12.75 lakh threshold for the Section 87A rebate.
No, the Section 87A rebate does not apply to short-term capital gains (STCG). STCG is taxed at a separate rate of 15% and is excluded from the rebate benefit.
Salaried individuals are the primary beneficiaries of the Section 87A rebate correction, as it significantly reduces their tax burden and puts more disposable income in their hands.
The drafting error meant that taxpayers could only claim a Rs 50,000 standard deduction instead of the newly announced Rs 75,000. The government corrected this in August 2025 to ensure the full benefit of the rebate is realised.
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