Is Your Income Tax-Free? The ₹12 Lakh Rebate Check
Type one number (your annual income) and get a straight answer: zero tax, a small marginal-relief amount, or the full slab bill. The Section 156 rebate, the rule you knew as 87A, decides which.
On the new regime for TY 2026-27, ₹12,00,000 is
Tax-free
You're ₹75,000 under the tax-free line of ₹12,75,000. Cross it and marginal relief phases the tax in gently rather than all at once.
New regime, resident individual. It treats the whole amount as ordinary slab-rate income, so capital gains and crypto sit outside this check. See every assumption. Nothing you type leaves your browser.
How the ₹12 lakh rebate works
The rule in one line: Section 156 of the Income-tax Act 2025 (the rebate that lived as Section 87A in the old law) cancels the entire slab tax of a resident individual on the new regime whose taxable income stays within ₹12,00,000. Slab tax at that point comes to ₹60,000, and the rebate is worth exactly that much, so the bill lands on zero.
Why salaried people get ₹12,75,000: The ₹75,000 standard deduction comes off salary before the slabs ever see it, turning ₹12,75,000 of gross pay into ₹12,00,000 of taxable income, which the rebate then wipes clean. Same rebate, higher starting line.
Marginal relief, just past the line: The rebate has a hard edge: a rupee over the ceiling and it's gone entirely. Marginal relief is the cushion: your tax can never exceed the amount you earned above ₹12,00,000, so a small raise can't trigger a five-figure tax bill. The worked example below shows the cap in action.
What the rebate never covers: Only income taxed at slab rates qualifies. Capital gains, crypto and other special-rate income are taxed at their own flat rates even when your total income sits under the ceiling. Someone on a ₹6 lakh salary with a ₹2 lakh crypto gain still pays the full 30% on the crypto.
It's a rebate, not an exemption limit: The slabs always compute tax on your whole taxable income; the rebate then cancels the result. So crossing the line doesn't suddenly tax you “from zero”; it just means the cancellation stops and marginal relief takes over.
The ₹12.1 lakh worked example. Taxable income of ₹12,10,000 sits ₹10,000 over the line. The slabs alone would charge ₹61,500: 5% on the ₹4 lakh between ₹4L and ₹8L (₹20,000), 10% on the next ₹4 lakh (₹40,000) and 15% on the last ₹10,000 (₹1,500). Marginal relief caps the tax at the ₹10,000 earned above the line, and 4% cess takes the final bill to ₹10,400. Past roughly ₹12,70,600 of taxable income the cap stops helping; plain slab tax is lower from there.
This checker assumes:
- You're a resident individual on the new regime for TY 2026-27. Non-residents don't get the Section 156 rebate at all.
- Everything you type is ordinary slab-rate income: salary, interest, rent. Capital gains, crypto/VDA income and lottery winnings carry their own rates and never qualify for the rebate.
- The only deduction modelled is the standard deduction when the salary box is ticked. Employer NPS and other new-regime deductions would lower your taxable income further.
- The figure shown includes 4% health and education cess. Surcharge starts far above this tool's useful range and is handled by the full calculator.
- Rates come from the TY 2026-27 slab set under the Income-tax Act 2025, verified 1 July 2026.
87A rebate FAQs
Is ₹12 lakh of income really tax-free in TY 2026-27?
Yes, for a resident individual on the new regime whose income is all ordinary slab-rate income. Slab tax on ₹12,00,000 of taxable income works out to ₹60,000, and the Section 156 rebate cancels exactly that much. Salaried earners get the ₹75,000 standard deduction first, which stretches the tax-free line to ₹12,75,000 of gross salary. The rebate never touches special-rate income like capital gains or crypto, though; those are taxed at their own rates however small your total income is.
What happens if I earn just above ₹12 lakh?
Marginal relief stops the cliff. At ₹12,10,000 of taxable income the slabs alone would charge ₹61,500, but relief caps the tax at ₹10,000 (the amount you earned above the line) plus 4% cess, ₹10,400 in all. The cap fades as income rises and stops mattering at roughly ₹12,70,600 of taxable income, where plain slab tax takes over.
Does the 87A rebate exist in the old regime too?
Yes, but it's far smaller: up to ₹12,500, and only when taxable income stays within ₹5,00,000. There's no marginal relief on the old-regime version either. Cross ₹5 lakh by a rupee and the whole rebate vanishes. The generous ₹12 lakh ceiling and the marginal-relief cushion belong to the new regime alone.
Where did Section 87A go in the Income-tax Act 2025?
It became Section 156. The mechanics carried over intact: a rebate that cancels slab tax up to the income ceiling, with marginal relief just above it on the new regime. Everyone still calls it the 87A rebate, which is why this checker keeps the old name.