Rebate under Section 87A
A rebate that reduces tax liability to nil for taxpayers below a specified income threshold, currently more generous under the new regime than the old.
Section 87A gives resident individual taxpayers a rebate that can bring their entire tax liability down to zero, provided their total income stays within a specified threshold. The rebate effectively cancels out the tax computed on income up to that limit, rather than simply exempting a portion of income the way a deduction does.
The threshold is higher under the new tax regime than the old one, which is a big part of why so many taxpayers with income up to roughly ₹12 lakh pay no tax at all under the new regime. It's worth noting the rebate applies to tax computed at normal slab rates; certain types of income, like specific capital gains, may be treated differently for rebate purposes depending on the applicable rules for that year.
This glossary entry is for general informational purposes only and does not constitute professional tax, legal, or financial advice. Rules and rates change, so consult a qualified Chartered Accountant for advice specific to your situation.