Calculate your exact tax liability under Section 87A for FY 2025-26 in seconds — rebate, marginal relief, and final payable amount near the ₹12 lakh income threshold.
Free Section 87A marginal relief calculator for FY 2025-26 (AY 2026-27). Enter your taxable income to instantly see your tax before rebate, Section 87A rebate applied, marginal relief benefit (for income between ₹12L–₹12.75L), and final tax payable including 4% cess — with a full slab-wise breakdown. Built on Budget 2025's revised new regime slabs and the ₹75,000 standard deduction for salaried employees. 100% private — all calculations run in your browser.
If your taxable income lands anywhere close to ₹12 lakh, two provisions decide whether you owe nothing or owe a real amount: the Section 87A rebate and marginal relief. This calculator applies both automatically for FY 2025-26 (AY 2026-27), using the revised New Regime slabs, and shows the exact tax you'd pay, cess included.
For a deeper walkthrough of the mechanics, see Marginal Relief in Income Tax under Section 87A.
Section 87A is a rebate provision under the Income Tax Act for resident individuals below a certain income level. Under the New Tax Regime, if your taxable income is ₹12,00,000 or less, you can claim a rebate that usually brings your tax down to zero.
Think of it this way: the government doesn't want middle-income earners paying tax at all below this line, so instead of endlessly adjusting the slabs, it hands back whatever tax you'd owe as a rebate. You still calculate tax normally first. The rebate then cancels it out.
That's the job this calculator does. Enter your taxable income and it works out how much of your tax the rebate wipes out, and how much (if any) survives.
For FY 2025-26 (AY 2026-27), the threshold is ₹12,00,000 for resident individuals, set in the Budget.
Here's how it's applied: if your taxable income is at or below that figure, you get a rebate equal to whichever is lower, your actual calculated tax, or ₹60,000 (the cap on the rebate itself).
For most salaried people under the threshold, calculated tax is already well below ₹60,000, so the rebate covers it entirely and the final bill is zero.
There's a further wrinkle worth knowing. Salaried employees also get a ₹75,000 standard deduction, which pushes the effective zero-tax income up to ₹12,75,000. So earning a bit over ₹12 lakh gross doesn't automatically mean you owe tax once that deduction is factored in.
Picture someone earning ₹12,00,001, one rupee over the rebate threshold. Without a safety net, losing the rebate entirely at that exact point would mean a sudden jump in tax for barely any extra income. That's the tax cliff problem, and it's exactly what marginal relief was built to prevent.
The rule is simple once you see it: your tax payable can never exceed the amount you earned above ₹12 lakh. Earn ₹12,10,000, and your tax is capped at ₹10,000 (the excess over the threshold), no matter what the slab math says on its own.
It's a fairness fix, essentially. Nobody should end up worse off just for crossing a line by a small margin.
The process runs in three steps:
Example: income of ₹12,50,000 gives an excess of ₹50,000, so tax is capped at ₹50,000, whatever the slab calculation produces on its own.
You don't need to track any of this by hand, which is really the point of using a calculator instead of a spreadsheet. And you don't need to claim it separately either. Once income crosses ₹12 lakh, both the rebate and marginal relief get applied automatically, here and later by the tax department when your return is processed.
| Income Slab | Rate |
|---|---|
| ₹0 – ₹4,00,000 | 0% |
| ₹4,00,001 – ₹8,00,000 | 5% |
| ₹8,00,001 – ₹12,00,000 | 10% |
| ₹12,00,001 – ₹16,00,000 | 15% |
| ₹16,00,001 – ₹20,00,000 | 20% |
| Above ₹20,00,000 | 30% |
The first ₹4 lakh is tax-free outright. Add the ₹75,000 standard deduction on top for salaried employees, and taxable income drops further before any of these slabs even apply.
These slabs run lower than the Old Regime's, which is a big part of why the New Regime is now the default for most taxpayers. Stack the lower slabs with the standard deduction and the 87A rebate, and middle-income earners come out well ahead.
Two inputs, that's it:
And here's what comes back:
It also breaks the calculation down slab by slab, so you can see where each rupee of tax comes from rather than just trusting one final number.
Take an income of ₹10,00,000. Tax works out to ₹0 on the first ₹4 lakh, ₹20,000 on the next ₹4 lakh at 5%, and ₹20,000 on the remaining ₹2 lakh at 10%, a total of ₹40,000. That's under the ₹60,000 rebate cap, so the full ₹40,000 gets rebated and the final tax is ₹0.
Push that up to exactly ₹12,00,000 and the tax comes to ₹60,000 (₹20,000 in the 5% band plus ₹40,000 in the 10% band). That happens to hit the rebate cap exactly, so it's fully rebated too. Final tax: ₹0, right at the edge of the threshold.
Cross into ₹12,10,000 and the picture changes. Tax works out to ₹61,500 (the usual ₹60,000 plus ₹1,500 on the ₹10,000 that falls in the 15% band). The excess over ₹12 lakh is only ₹10,000, so marginal relief of ₹51,500 kicks in, capping tax at ₹10,000. Add 4% cess and the final figure is ₹10,400.
That last example is the one people find confusing. ₹10,000 of extra income doesn't map to a small tax bump, it maps to a jump straight from ₹0 to ₹10,400. That's marginal relief working as intended, but it can look alarming if you don't know the rule going in.
Assuming tax spikes just past ₹12 lakh. It doesn't. Marginal relief specifically stops that from happening, so tax rises in proportion to income, not disproportionately.
Missing that relief is even happening. Some people see their tax figure and assume it's wrong because it doesn't match a plain slab calculation. It won't, and that's by design.
Mixing up gross salary and taxable income. These aren't the same number. Standard deduction, home loan interest, and other deductions bring taxable income down first, and that's the figure this tool asks for.
Forgetting the 4% cess. It applies to everyone, on top of tax after rebate and relief. Easy to forget when you're focused on the ₹12 lakh threshold itself.
Assuming you need to apply for these benefits. You don't. Both are automatic once your ITR is processed.
Overlooking the standard deduction if you're salaried. That ₹75,000 comes off before anything else is calculated, which is a chunk of why salaried employees often land at a lower final number than self-employed individuals earning the same gross amount.
Worth flagging: the 87A rebate and marginal relief, as described here, apply to income taxed at the normal slab rates above. If you also have income taxed at special rates, certain capital gains for instance, how the rebate applies there has been interpreted differently at different times. If your income mix includes anything beyond salary and standard slab-rate income, check that portion separately rather than assuming this calculator's output covers it in full.
Slabs, thresholds, and rebate limits get revisited most Budgets, so what holds for FY 2025-26 won't necessarily hold going forward. If you're planning a few years out rather than just this year's filing, the projection and multi-year comparison tools listed above can help. It's also worth running your numbers through the salary calculator above for the full picture, not just the rebate math.
This runs entirely in your browser, so your income figures never leave your device to get to us.
Nobody else, including us, sees what you calculate here.
Section 87A rebate and marginal relief exist to protect people earning up to around ₹12 lakh (or ₹12.75 lakh once the salaried standard deduction is in) from paying tax at all, and to stop a small raise from creating a disproportionate tax jump once you're past that line.
This calculator handles both automatically: tax before relief, the rebate applied, whether marginal relief kicks in, and your final number including cess, broken down slab by slab so you see the working, not just the result.
Understanding how these two provisions interact matters if you're negotiating a raise or deciding how to structure income near this threshold. It's easy to get wrong by eyeballing it.
This tool gives an estimate based on the Income Tax Act and the current Budget update. For anything that needs to be exact, ITR filing included, check with a Chartered Accountant. It's built for planning, not as a substitute for professional advice.
A rebate on income tax for resident individuals. If taxable income is ₹12,00,000 or under, the rebate equals the lower of your calculated tax or ₹60,000, which brings most people below that line to zero tax.
It applies once income goes past ₹12,00,000, capping tax so it never exceeds the amount earned above that threshold. That's what stops the tax cliff effect.
0% up to ₹4L, 5% from ₹4L–₹8L, 10% from ₹8L–₹12L, 15% from ₹12L–₹16L, 20% from ₹16L–₹20L, and 30% above ₹20L, all lower than the Old Regime.
Yes, for every taxpayer. It's calculated on tax plus surcharge (where surcharge applies), and there's no way around it.
Resident individuals only, not NRIs, and only if taxable income is ₹12,00,000 or below under the New Regime. No separate claim needed, it's applied automatically when your ITR is processed.
No, it's specific to the New Regime. That's part of why the New Regime tends to work out better for middle-income earners once you add up lower slabs, the standard deduction, the rebate, and marginal relief together.
That's the point where tax actually starts. Below it, the standard deduction plus rebate plus marginal relief combination keeps you at zero. Above it, marginal relief still limits tax to the excess over ₹12 lakh, it just doesn't erase it entirely anymore.
Yes, indirectly. It reduces taxable income first, and that reduced figure is what determines both rebate eligibility and marginal relief. A salaried employee earning ₹12,50,000 gross, for example, has a taxable income of ₹11,75,000 after the ₹75,000 deduction, before any 87A or marginal relief calculations even come into play.
Calculations verified by our team including CA Anita Patil. View our full accuracy policy and meet the team →
For informational purposes only. Results are estimates based on the inputs you provide and the rules in effect for the period shown, and are not tax, legal or financial advice. Verify figures against the relevant official source and consult a qualified professional before acting on them. Accuracy & limitations
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