What is Section 87A rebate in FY 2025-26?

Section 87A gives a rebate of up to ₹60,000 under the New Regime if taxable income is ≤ ₹12 lakh, making final tax zero. Under Old Regime the rebate is ₹12,500 for income ≤ ₹5 lakh.

Who is eligible for Section 87A?

Individual resident taxpayers whose taxable income does not exceed ₹12 lakh (New Regime) or ₹5 lakh (Old Regime). HUFs and companies are not eligible. Does not apply to special-rate incomes like capital gains at flat rates.

Is income up to ₹12 lakh completely tax free under New Regime?

For salaried individuals yes — effectively. With the ₹75,000 standard deduction, a gross salary of ₹12.75 lakh gives exactly ₹12 lakh taxable income, which attracts zero tax after the 87A rebate.

What happens if income crosses ₹12 lakh by a small amount?

You lose the full 87A rebate, but marginal relief applies. Your tax is capped at the income above ₹12 lakh. So at ₹12.5 lakh taxable income, tax is ₹50,000 + 4% cess, not the full ₹86,528 that would normally apply.

Does Section 87A apply to capital gains?

No. Section 87A rebate does not apply to special-rate income like STCG under Section 111A or LTCG under Section 112A. Even if total income is below ₹12 lakh, tax on such gains must be paid separately.

FY 2025-26 · AY 2026-27

Standard Deduction ₹75,000 — What It Is and How Much Tax It Saves

The standard deduction is the easiest tax saving available to every salaried person. No bills, no investment, no proof needed — just a flat reduction in your taxable income, automatically applied.

✓ ₹75,000 — New Regime

₹50,000 — Old Regime

Quick Answer

Every salaried employee and pensioner gets a standard deduction of ₹75,000 under the New Tax Regime and ₹50,000 under the Old Tax Regime for FY 2025-26. This amount is subtracted from your gross salary before tax is calculated. No receipts, no employer form — it's automatic.

New Tax Regime

₹75,000

Increased from ₹50,000 in Budget 2024. No proofs needed.

✓ HIGHER DEDUCTION

Old Tax Regime

₹50,000

Unchanged since FY 2019-20. Automatic, no documents required.

How Standard Deduction Works — Step by Step

Example: ₹15 lakh gross salary under the New Regime. See exactly how ₹75,000 reduces your tax:

Step	Amount
Gross Salary	₹15,00,000
Standard Deduction (New Regime)	− ₹75,000
Taxable Income	₹14,25,000
Tax on ₹0–₹4,00,000 (0%)	₹0
Tax on ₹4,00,001–₹8,00,000 (5%)	₹20,000
Tax on ₹8,00,001–₹12,00,000 (10%)	₹40,000
Tax on ₹12,00,001–₹14,25,000 (15%)	₹33,750
Total Tax	₹93,750
Cess (4%)	₹3,750
Final Tax + Cess	₹97,500

Without the ₹75,000 standard deduction, taxable income would be ₹15L and total tax would be ₹1,12,320. The deduction saves ₹14,820 at the 15% slab (₹75,000 × 15% + 4% cess).

How Much Tax Does the Standard Deduction Actually Save?

The saving depends on which tax slab your income falls in — higher the slab, more you save from the same deduction:

Taxable Income Range	Slab Rate	Tax Saved (New ₹75K)	Tax Saved (Old ₹50K)
₹0–₹4L	0%	₹0	₹0
₹4L–₹8L	5%	₹3,900	₹2,600
₹8L–₹12L	10%	₹7,800	₹5,200
₹12L–₹16L	15%	₹11,700	₹7,800
₹16L–₹20L	20%	₹15,600	₹10,400
Above ₹20L	25–30%	₹19,500–₹23,400	₹15,600

All savings include 4% cess. Formula: (deduction amount × slab rate) × 1.04.

Key Insights

✓ The Critical Impact at ₹12.75L Salary

For a salaried person earning exactly ₹12.75 lakh, the ₹75,000 standard deduction brings taxable income to exactly ₹12 lakh — the 87A rebate limit. This means zero tax. Without this deduction, taxable income would be ₹12.75L and tax would be ~₹1.12 lakh. The deduction is worth over ₹1 lakh in this specific case.

⚠ Standard Deduction Cannot Exceed Salary Income

If your total salary income is somehow less than ₹75,000 (extremely uncommon), the deduction is limited to your actual salary. For all practical purposes, this doesn't affect any salaried employee earning a regular annual salary.

💡 New Regime Gives ₹25,000 More Deduction

The extra ₹25,000 in the New Regime (₹75K vs ₹50K) saves additional tax based on your slab: ₹2,600 at 10%, ₹3,900 at 15%, ₹5,200 at 20%, ₹7,800 at 30%. This is one of the direct financial advantages of the New Regime — a higher deduction despite fewer other allowances.

See Your Tax With Standard Deduction Applied

Our calculator automatically applies the correct standard deduction based on the regime you choose.

Calculate My Tax Free →

Frequently Asked Questions

What is the standard deduction for salaried employees in FY 2025-26?

₹75,000 under the New Tax Regime and ₹50,000 under the Old Tax Regime. Both are automatic — no receipts, no employer proof, no Form 12BB. Your employer deducts it before calculating TDS on your salary.

Is standard deduction available under New Tax Regime?

Yes. Budget 2024 introduced the ₹75,000 standard deduction under the New Regime from FY 2024-25 onwards. Previously, it was only available under the Old Regime. Importantly, the New Regime now provides a higher standard deduction (₹75,000 vs ₹50,000).

Do I need to submit any proof for standard deduction?

No. It is completely automatic. Unlike HRA or 80C deductions where you submit rent receipts or investment proofs, the standard deduction needs nothing. It applies to all salaried employees and pensioners regardless of actual expenses incurred.

Is standard deduction available to pensioners?

Yes. Pensioners receiving pension from their former employer can claim ₹75,000 (New Regime) or ₹50,000 (Old Regime). Family pensioners — those receiving pension after an employee's death — get a separate deduction of one-third of pension or ₹15,000, whichever is lower.

How much extra tax does the New Regime's higher deduction save?

The extra ₹25,000 (₹75K minus ₹50K) saves tax based on your slab. At 10% slab: ₹2,600. At 15%: ₹3,900. At 20%: ₹5,200. At 30%: ₹7,800. All figures include 4% cess. This adds to the overall advantage of the New Regime for most salaried employees.

Explore Related Tax Guides

The standard deduction works alongside the 87A rebate and slab rates to shape your final tax: