Enhanced Rebate u/s 87A – Budget 2025-26

💰 Major Tax Relief for Middle Class – Income up to ₹12 Lakhs Tax-Free*

The Budget 2025-26 has significantly enhanced the rebate under Section 87A, making the New Tax Regime more beneficial than ever.

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📊 Key Highlights

✅ 1. Tax-Free Income Limit Increased

• Earlier: ₹7,00,000

• Now: ₹12,00,000

• Result: Zero tax liability up to ₹12 lakhs (subject to conditions)

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✅ 2. Rebate Amount Increased

• Earlier rebate: ₹25,000

• Now increased to: ₹60,000

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✅ 3. Marginal Relief Available

• If income slightly exceeds ₹12 lakhs,

• Additional tax will not exceed the extra income earned

• Prevents sudden tax burden

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⚠️ 4. Important Restriction

Rebate NOT available on special rate incomes like:

• Capital Gains (Shares, Property, etc.)

• Lottery income

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🎯 Practical Impact

Income	Tax under New Regime
₹8,00,000	NIL
₹10,00,000	NIL
₹12,00,000	NIL
₹12,10,000	Small marginal tax only

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📌 Strategic Insight

✔ Strong push towards New Tax Regime
✔ Major benefit for salaried & professionals
✔ Significant increase in disposable income
✔ Simplifies tax planning (less dependency on deductions)

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🧾 Conclusion

This amendment is a game-changing tax relief, making ₹12 lakh income effectively tax-free (excluding special incomes). 

Proper structuring of salary and income can help maximise this benefit.

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📍 Gururaaja Sanjay & Co, Chartered Accountants
📞 +91 77602 52581
🌐 https://share.google/aOzL0ZYXlgKBzSjib

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