Resident-Individual Tax Rebate Explained for Tax Year 2026–27

The ₹12 lakh rule is conditional

For Tax Year 2026–27, section 156 of the Income-tax Act, 2025 allows a resident individual whose total income is chargeable under the section 202 new regime a rebate equal to the eligible calculated tax, capped at ₹60,000, when total income does not exceed ₹12,00,000. This is the current counterpart of the rebate previously associated with section 87A of the Income-tax Act, 1961.

Within this calculator's supported ordinary slab-income scenario, slab tax at ₹12,00,000 is ₹60,000 and the ordinary rebate reduces it to zero before cess. This should not be restated as everyone earning ₹12 lakh always pays zero tax: the official provision limits the rebate to tax payable at ordinary new-regime slab rates, while this calculator does not classify or calculate special-rate income.

What happens at and above ₹12 lakh

The examples below come directly from the current Income Tax engine. Marginal relief limits tax after relief to the amount by which income exceeds ₹12 lakh while the ordinary slab tax is higher than that excess.

₹12,00,001 does not create a ₹60,000 tax cliff

At ₹12,00,001, ordinary rebate is zero, but marginal relief reduces ₹60,000.15 of slab tax by ₹59,999.15. Tax after relief is ₹1; 4% cess is ₹0.04; the final estimate is ₹1.04.

At ₹12,50,000, marginal relief is ₹17,500 and tax after relief is ₹50,000. Near the crossover, ₹12,70,588 still receives ₹0.20 of marginal relief. From the point where ordinary slab tax is no higher than income above ₹12 lakh, marginal relief no longer changes the result.

Relief comes before cess

Cess is calculated on tax after the applicable rebate or marginal relief. The 4% cess explanation shows this order separately.