87A Marginal Relief
₹12L-₹12.71L Zone

Section 87A NEW REGIME me (FY 2026-27): taxable income ≤ ₹12L = up to ₹60,000 rebate = ZERO tax. Income > ₹12L par full rebate nahi milta, toh tax seedha ₹60,000+ ho jata.

MARGINAL RELIEF yeh jump rokta hai: tax capped at (income − ₹12L) until about ₹12,70,588. EXAMPLES (tax before 4% cess): ₹12,00,000 = ₹0. ₹12,10,000 = ₹10,000. ₹12,50,000 = ₹50,000. ₹12,70,000 = ₹70,000. ₹12,70,588 se upar normal slab tax applies.

MARGINAL ZONE: ₹12L to ~₹12.71L. Source: Finance Act 2025 slabs (unchanged for FY 2026-27; Income-tax Act 2025 s.202 replaced s.115BAC and s.157 replaced 87A from 1 April 2026).

MARGINAL ZONE INSIGHT: ₹12L–₹12.71L zone me har extra rupee effectively 100% taxed (plus 4% cess) — incremental income poori tax me chali jaati hai. EXAMPLE: taxable income ₹12L se ₹12.2L = ₹20K extra income, ₹20K tax (+ ₹800 cess).

Net take-home roughly unchanged. STRATEGIC: (1) Employer NPS contribution (80CCD(2)) — new regime me allowed, up to 14% of basic+DA — salary restructure karke taxable income ₹12L ke neeche. (2) Ya ₹12.71L se upar kamaye.

NOTE: employee ka apna ₹50K NPS deduction (80CCD(1B)) new regime me NAHI milta.

STRATEGIES near the ₹12L marginal zone (new regime): (1) Employer NPS (80CCD(2), up to 14% of basic+DA) via salary restructuring — the main deduction still allowed in the new regime. (2) Bonus/variable pay timing: defer to next FY if it pushes you just above ₹12L. (3) 80C/80D/HRA only help if you move to the OLD regime — and at ₹12L taxable the old regime costs ₹1,79,400 (incl. cess) vs ₹0 new, so it rarely pays here. EXAMPLE: ₹12.10L taxable.

Employer NPS ₹10,000+ via restructuring → taxable ₹12L → ₹10,400 tax (incl. cess) avoided, and the ₹10K is invested for retirement.

OLD REGIME 87A: ₹12,500 rebate for income ≤ ₹5L. NO marginal relief.

NEW REGIME 87A (FY 2026-27): up to ₹60,000 rebate for income ≤ ₹12L, plus marginal relief up to ~₹12.71L. CHOICE: taxable income up to ₹12L → new regime zero tax (salaried ₹12.75L gross).

Above that, old regime wins only with large deductions (home loan + 80C + 80D + HRA) — compare both every year with a calculator.

SENIOR CITIZENS (60+): Same 87A rebate amount + thresholds. NO senior preferential treatment under 87A.

HOWEVER, seniors get OTHER benefits: (1) Old regime: higher basic exemption ₹3L (80+: ₹5L); new regime: ₹4L for all ages. (2) 80TTB ₹50K interest deduction (old regime only). (3) SCSS rate 8.2%. STRATEGIC: Senior with taxable income up to ₹12L: new regime gives zero tax via 87A.

Senior with heavy interest income and big deductions: compare with old regime + 80TTB.