What Is the Income Tax Rebate for FY 2024–25?
What Is the Income Tax Rebate for FY 2024–25?
Section 87A Explained for AY 2025–26 | Updated Tax Saving Guide
One of the most popular tax benefits available to small taxpayers in India is the income tax rebate under Section 87A. If you're earning a modest income and want to know whether you qualify for zero tax liability, this article will give you a complete breakdown of the rebate for Financial Year 2024–25 (Assessment Year 2025–26).
✅ What Is a Tax Rebate?
A tax rebate is a direct deduction from your total tax payable, not from your income. It reduces the amount of tax you owe after calculating your liability as per applicable slabs.
In India, the main rebate for individuals is available under Section 87A of the Income Tax Act.
📘 Section 87A Rebate for FY 2024–25
The Section 87A rebate offers relief to resident individuals with total taxable income up to a specified limit. The amount and eligibility differ depending on which tax regime you choose:
1. Under New Tax Regime (Default Regime)
| Particulars | Details |
| Applicable to | Resident Individuals (any age) |
| Income limit | Up to ₹7,00,000 |
| Maximum rebate | ₹25,000 |
| Final tax payable | Zero |
So, if your net taxable income is ₹7 lakh or less, your entire tax liability is wiped out, making it zero tax under the New Regime.
2. Under the Old Tax Regime
| Particulars | Details |
| Applicable to | Resident Individuals (below 60 years) |
| Income limit | Up to ₹5,00,000 |
| Maximum rebate | ₹12,500 |
| Final tax payable | Zero |
This rebate helps small taxpayers who use deductions (like 80C, 80D, HRA) to bring their income below ₹5 lakh under the old regime.
🔁 Can You Claim a Rebate Under Both Regimes?
Yes, but:
- Under the old regime, the rebate is capped at ₹12,500, and income should not exceed ₹5 lakh.
- Under the new regime, the rebate goes up to ₹25,000, and income can go up to ₹7 lakh.
💡 If your income falls in this range, the New Regime may offer better relief, especially if you don’t claim many deductions.
🧮 Quick Example – New Regime
Mr. Raj earns ₹7,00,000 (fixed salary, no deductions).
| Tax liability under the New Regime (before rebate) | ₹25,000 |
| Rebate under 87A | ₹25,000 |
| Final tax payable | ₹0 |
🧮 Quick Example – Old Regime
Ms. Asha earns ₹6,00,000
Invests ₹1.5L under 80C, claims ₹50K standard deduction
| Net taxable income | ₹4,00,000 |
| Tax before rebate | ₹5,000 |
| Rebate under 87A | ₹5,000 |
| Final tax payable | ₹0 |
Final Words
For FY 2024–25, the Section 87A income tax rebate is a smart benefit that can reduce your tax liability to zero if you meet the income conditions.
| Regime | Max Income | Rebate Amount | Final Tax |
| New Regime | ₹7,00,000 | ₹25,000 | ₹0 |
| Old Regime | ₹5,00,000 | ₹12,500 | ₹0 |
💡 Tip: If your income slightly exceeds the rebate limit, explore salary restructuring or tax-saving options to bring it within range.
Our tax experts can help you file returns legally and avoid penalties.
👉 https://callmyca.com/business-tax-filing
