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Help Required - U/S 87A

Partha Mukherjee (Associates) (26 Points)

29 June 2025

For Assessment Year 2026 - 27

Can you please help me with the above issue. Is there any Rule or Basis of Calculations ??

Although The Limit is 12,00,000/- under New Regime and above that no rebate will be allowed. I find upto 13,40,000/- for Salaried People some amount of rebate showing.

The thing is not clear to me. I would be grateful if you can help me of provide me any Excel File for Calculating Rebate.

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Minati Nandy (4 Points)
Replied 29 June 2025

Why you see different income limits:

₹12,00,000 limit: This is the upper limit where rebate completely phases out under the new tax regime
₹13,40,000 for salaried people: This accounts for:

Gross income of ₹13,40,000
Less: Standard deduction of ₹50,000 (for salaried)
Less: Basic exemption considerations
Effective taxable income: Around ₹12,90,000 (still within phase-out range)

Section 87A Rules & Basis of Calculation:

New Tax Regime (AY 2026-27):

Full Rebate: Available if taxable income ≤ ₹7,00,000
Partial Rebate: Phases out between ₹7,00,000 to ₹12,00,000
No Rebate: If taxable income > ₹12,00,000
Rebate Amount: Lower of ₹12,500 or actual tax liability

Formula for Phase-out:

Rebate = Base Rebate × (1 - [(Taxable Income - 7,00,000) ÷ 5,00,000])

For Salaried Employees:

Gross income can be ₹50,000 higher due to standard deduction
This explains why you see rebate showing for income up to ₹13,40,000

The calculator we have includes:

Interactive rebate computation
Phase-out calculations
Different scenarios for salaried vs other individuals
Downloadable Excel file with formulas

The rebate doesn't abruptly stop at ₹12,00,000 but gradually reduces, which creates the effect you observed where some rebate shows even at higher income levels for salaried individuals. This rebate calculator is free if interested email me at addressing to Minati help @ hanaset.com.