Section 87A

You cannot claim a rebate under Section 87A to pay ₹0 tax. While the ₹50,00,000 exemption under Section 54EC successfully reduces your taxable LTCG to ₹0, your remaining income from FD interest and dividends totals ₹8,00,000. Because ₹8,00,000 exceeds the eligibility threshold of ₹7,00,000 (New Regime) and ₹5,00,000 (Old Regime), Section 87A does not apply, leaving you with a net tax payable of ₹31,200 under the New Tax Regime (or ₹75,400 under the Old Tax Regime without Chapter VI-A deductions).

One correction on the figures above. From FY 2025-26 (AY 2026-27), the new regime rebate under Section 87A (Section 156 of the Income-tax Act 2025) applies where total income is up to Rs 12,00,000, with a maximum rebate of Rs 60,000. The Rs 7,00,000 limit is the older figure. If the whole long-term gain is covered by the 54EC investment, your remaining normal income is Rs 8,00,000, which is within that limit, so tax could come to nil for a resident individual under the new regime. Any part of the gain that stays taxable is taxed at a special rate, and the rebate does not cover that portion. Please confirm with your CA before filing. General information, not advice.

Thanks a lot.

I also felt that because the limit has been raised there will be no tax liability.