Section 87A to Section 156: Tax Rebate for Tax Year 2026–27

At or below ₹12 lakh, an eligible resident individual may receive a rebate

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. Section 87A of the Income-tax Act, 1961 applies to AY 2026–27, covering income earned in FY 2025–26 (1 April 2025 to 31 March 2026). This guide covers Tax Year 2026–27, the same period as FY 2026–27 (1 April 2026 to 31 March 2027), for which section 156 is the current rebate provision. The two year labels refer to different income periods.

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. Eligibility depends on total income, including any special-rate income, not just the ordinary-income amount entered in this calculator. Section 156(3) caps both the new-regime rebate and marginal relief at tax calculated using section 202(1) rates; tax on special-rate income, such as applicable capital gains, is not offset by this relief. A non-resident or HUF does not qualify for this resident-individual rebate. The calculator does not compute mixed-income cases or determine residential status.

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.

Marginal relief softens the threshold

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 unrounded final estimate is ₹1.04. This illustrates the relief formula, not an amount payable on filing. Section 516 requires total income and amounts payable or refundable to be rounded to the nearest ₹10 after ignoring paise, with a last digit of five or more rounded up. Thus ₹12,00,001 would first round to ₹12,00,000 for the statutory income computation; do not treat the fractional table results as filing amounts.

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. In plain language, the relief limits the modeled tax increase just above the threshold to the income above ₹12 lakh until the ordinary slab tax is no higher than that excess.

Relief comes before cess

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