# Rebate for Resident Individuals — Section 87A
The rebate u/s 87A reduces tax for resident individuals with modest income. The mechanics differ sharply between the Default Tax Regime (DTR) and the Optional Tax Regime (OTR).
## A. Default Tax Regime (s.115BAC) — post Fin Act 2025
| Total income | Rebate |
|---|---|
| ≤ ₹12,00,000 | Lower of basic tax amount or ₹60,000 |
| > ₹12,00,000 | Marginal rebate (see steps) |
Marginal Rebate Steps (TI > ₹12 lakh):
- A = Total Income − ₹12,00,000
- B = Basic tax on Total Income
- If B > A, Rebate = B − A
Maximum rebate limits:
- Rebate cannot exceed income-tax (before rebate) on total income.
- Rebate cannot exceed tax computed u/s 115BAC(1A) — i.e., tax on normal incomes under DTR.
Special income note: Special incomes are counted while checking the ₹12 lakh limit, but the rebate cannot exceed tax on normal incomes (115BAC(1A)). Tax on special incomes is not eligible for rebate.
## B. Optional Tax Regime (normal provisions)
| Total income | Rebate |
|---|---|
| ≤ ₹5,00,000 | Lower of basic tax payable or ₹12,500 |
Maximum rebate cannot exceed income-tax (before rebate) on total income.
## Common Rules
- Rebate is allowed from basic income-tax computed before adding 4% Health & Education cess.
- Under OTR, rebate is NOT available on LTCG u/s 112A (but rebate is available on other special incomes under OTR).
- Under DTR, rebate is NOT available on any special income.