The 87A rebate and the 12 lakh limit, FY 2026-27: where tax starts
The rebate under section 87A is why a taxable income of up to ₹12,00,000 pays no income tax in India. For the 2026-27 financial year the rebate continues under the Income-tax Act, 2025, and its limits have not changed: up to ₹60,000 under the new regime when taxable income is not above ₹12,00,000, and up to ₹12,500 under the old regime when taxable income is not above ₹5,00,000. This guide shows where it stops and what happens just above the limit.
The limit applies to taxable income, not to your salary
The ₹12,00,000 is counted after deductions. In the new regime the only deduction a salaried person gets is the standard deduction of ₹75,000, so the PIB note on Budget 2025-26 puts the zero-tax salary at ₹12,75,000 for salaried taxpayers. The calculation here gives the same figure: on a gross salary of ₹12,75,000 the taxable income is ₹12,00,000 and the tax is nil.
Just above the limit: marginal relief
The slab tax at ₹12,00,000 is ₹60,000. If the rebate vanished the moment income crossed the limit, one extra rupee would cost ₹60,000. Marginal relief prevents that: above ₹12,00,000 the tax cannot be more than the income over ₹12,00,000. At ₹12,00,001 the slab tax is still ₹60,000, the relief cuts it by ₹59,999, and ₹1 is left before cess.
| Taxable income | Slab tax | Rebate or relief | Tax before cess | Tax with 4% cess |
|---|---|---|---|---|
| ₹11,00,000 | ₹50,000 | -₹50,000 | ₹0 | ₹0 |
| ₹12,00,000 | ₹60,000 | -₹60,000 | ₹0 | ₹0 |
| ₹12,00,001 | ₹60,000 | -₹59,999 | ₹1 | ₹1 |
| ₹12,20,000 | ₹63,000 | -₹43,000 | ₹20,000 | ₹20,800 |
| ₹12,50,000 | ₹67,500 | -₹17,500 | ₹50,000 | ₹52,000 |
| ₹12,70,000 | ₹70,500 | -₹500 | ₹70,000 | ₹72,800 |
| ₹12,80,000 | ₹72,000 | ₹0 | ₹72,000 | ₹74,880 |
| ₹13,00,000 | ₹75,000 | ₹0 | ₹75,000 | ₹78,000 |
| ₹14,00,000 | ₹90,000 | ₹0 | ₹90,000 | ₹93,600 |
The relief works while the slab tax is larger than the excess over ₹12,00,000. That holds up to a taxable income of ₹12,70,587. Above it the ordinary slab tax is the smaller number, so the rebate is gone and the 15% slab applies in full.
What it means for a CTC
A CTC is not a gross salary. With basic pay at 50% of the CTC and the employer EPF inside it, the gross salary is the CTC less ₹72,000 at ₹12,00,000. On those settings the highest CTC with nil tax is ₹13,56,384, and marginal relief still applies up to a CTC of ₹14,31,471.
| CTC | Employer EPF | Gross salary | Taxable income | Income tax | Monthly in-hand |
|---|---|---|---|---|---|
| ₹12,00,000 | ₹72,000 | ₹11,28,000 | ₹10,53,000 | ₹0 | ₹88,000 |
| ₹13,00,000 | ₹78,000 | ₹12,22,000 | ₹11,47,000 | ₹0 | ₹95,333 |
| ₹13,56,384 | ₹81,384 | ₹12,75,000 | ₹12,00,000 | ₹0 | ₹99,468 |
| ₹13,66,384 | ₹81,984 | ₹12,84,400 | ₹12,09,400 | ₹9,776 | ₹99,387 |
| ₹14,06,384 | ₹84,384 | ₹13,22,000 | ₹12,47,000 | ₹48,880 | ₹99,061 |
| ₹14,31,471 | ₹85,884 | ₹13,45,587 | ₹12,70,587 | ₹73,410 | ₹98,858 |
| ₹15,00,000 | ₹90,000 | ₹14,10,000 | ₹13,35,000 | ₹83,460 | ₹1,03,045 |
In the table the tax does not jump at the nil point. ₹10,000 of CTC above it costs ₹9,776 of tax, ₹50,000 above it costs ₹48,880, and at the end of the relief zone, a CTC of ₹14,31,471, the tax is ₹73,410. The calculator on this site applies the same rule, so you can check any CTC in the calculator.
The old regime has no marginal relief
The old regime rebate is ₹12,500 for a taxable income up to ₹5,00,000. Above that limit the rebate is gone completely and there is no relief at the edge.
| Old regime taxable income | Slab tax | Rebate | Tax with 4% cess |
|---|---|---|---|
| ₹5,00,000 | ₹12,500 | -₹12,500 | ₹0 |
| ₹5,00,001 | ₹12,500 | ₹0 | ₹13,000 |
| ₹5,50,000 | ₹22,500 | ₹0 | ₹23,400 |
At ₹5,00,000 the tax is nil. One rupee more and the tax with cess is ₹13,000. That is why a taxable income just above ₹5,00,000 is worth bringing down with a deduction if you are in the old regime.
What the rebate does not cover
The rebate is for tax on income taxed at the normal slab rates. The Budget speech limit is stated "other than special rate income such as capital gains". The calculator here handles salary income only, so capital gains, dividends and income from other sources are not in the figures. Residents only: the rebate is for an individual resident in India, and a person aged 60 or more has different old regime slabs.
Check your own CTC against the 12 lakh limitSources
- Ministry of Finance: Memorandum explaining the Finance Bill 2026 (no change in rates for 2026-27)
- PIB: Budget 2025-26, no tax up to Rs 12 lakh, Rs 12.75 lakh for salaried taxpayers
- Income Tax Department e-filing portal: rebate limits under both regimes
- Budget speech 2026-27: the Income Tax Act, 2025 comes into effect from 1 April 2026
- Every rate used, with its source and check date: Sources and rates
This calculator is general information only. It uses the Income Tax Department, Ministry of Finance and EPFO pages listed on the Sources page, and your payslip, your employer's tax deducted at source and your personal situation may differ. Rates as at 2 November 2026.