Help Required - U/S 87A

693 views

Save Share

Join Us Follow Us Add as Source

Partha Mukherjee

Associates

31 Points Posted on 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.

Replies (3)

Minati Nandy

24 Points Posted on 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.

Aashok Kumar Sharma

Finance/Compliance Consultant

77986 Points Posted on 13 November 2026

87A for AY 2026-27 (FY 2025-26):

• New regime: rebate up to Rs 60,000 if total income is up to Rs 12 lakh, with marginal relief just above Rs 12 lakh (tax capped at the excess income). Not available against tax on special-rate income (111A, 112, 112A).

• Old regime: rebate up to Rs 12,500 if total income is up to Rs 5 lakh.

• For salaried, the Rs 12.75 lakh figure is Rs 12 lakh plus the Rs 75,000 standard deduction.

Rushabh

Automation Expert

10733 Points Posted on 13 November 2026

For AY 2026–27, the rebate under section 87A for an individual opting for the new tax regime is available where total income does not exceed ₹12 lakh. The maximum rebate is ₹60,000, limited to the tax payable before cess; it does not apply once total income exceeds ₹12 lakh. The special marginal relief can, however, reduce tax where income is slightly above ₹12 lakh—it limits the tax increase to the amount by which income exceeds ₹12 lakh. This is why a calculation may show relief above the threshold; it is not a general rebate up to ₹13.4 lakh.

For a salaried individual, the ₹75,000 standard deduction may mean gross salary up to ₹12.75 lakh results in total income of ₹12 lakh, subject to other income and deductions. The standard deduction does not extend marginal relief to ₹13.4 lakh. Also check whether the calculation includes special-rate income, such as capital gains, because the rebate treatment can differ. Use the applicable Finance Act and tax utility for the final computation; a spreadsheet should separately calculate slab tax, section 87A rebate, marginal relief and cess.

This distinction is important when preparing salary and individual return computations under the new regime. Manual calculations across salary, other income and special-rate income can be difficult; automation reduces repetitive work while leaving tax treatment and review under professional judgment. At Jir AI, our 2,000+ AI agents and 650+ integrations streamline GST, ITR, TDS, TCS and other compliance workflows, helping reduce manual workload by up to 70%. For help streamlining these workflows, connect with us on WhatsApp: https://wa.me/message/3HVOZ7HIY4ESC1