Tag: Old Tax Regime

Difference Between Exemption, Deduction and Rebate in Income Tax

Posted on by CA Meet Dhrangadhariya

Last updated: 29 July 2026 · Written and reviewed by CA Meet Dhrangadhariya, CSM & Co LLP

Quick summary

  • An exemption keeps a particular income out of tax altogether, a deduction reduces your taxable income, and a rebate reduces the tax you have to pay.
  • Examples: agricultural income is exempt, section 80C is a deduction, and the section 87A rebate cuts your computed tax.
  • For Tax Year 2026-27 the new regime gives a rebate of up to ₹60,000 if taxable income is up to ₹12 lakh; the old regime gives up to ₹12,500 if income is up to ₹5 lakh.
  • Most exemptions and deductions (HRA, 80C, 80D) work only in the old regime.

Exemption, deduction, rebate and relief are often used as if they mean the same thing. They do not. Each works at a different stage of the tax calculation, and knowing which is which helps you plan your tax and read your Form 16 correctly.

Exemption

An exemption makes a particular income tax-free. That income is left out of your total income, so it never enters the calculation.

Examples:

  • Agricultural income.
  • House rent allowance (HRA), within the prescribed limit, in the old regime.
  • Leave travel allowance (LTA), on the conditions of the rules, in the old regime.
  • Scholarships granted to meet the cost of education.
  • Gratuity and leave encashment on retirement, up to the limits allowed.

In the Income-tax Act, 2025, which applies from 01/04/2026, most of these exemptions are listed in the Schedules to the Act, while the old section 10 no longer exists as a single section.

Deduction

A deduction is an amount you subtract from your income, because you invested in or spent on something the law encourages. It reduces your taxable income, so the tax saved depends on your slab rate.

Examples:

  • Standard deduction on salary and pension.
  • Section 80C: up to ₹1.5 lakh for PPF, ELSS, life insurance and more.
  • Section 80D: health insurance premium. In the old regime, up to ₹25,000 for self, spouse and children (₹50,000 if a senior citizen), and the same again for parents.
  • Section 80E: interest on an education loan.
  • Section 24(b): home loan interest, up to ₹2 lakh for a self-occupied house.

Rebate

A rebate reduces the tax itself, after it has been computed on your taxable income. The main one is section 87A, available to resident individuals.

New regime (default) Old regime
Taxable income limit ₹12,00,000 ₹5,00,000
Maximum rebate ₹60,000 ₹12,500

These limits apply to Tax Year 2026-27 and to FY 2025-26. Marginal relief is available in the new regime for income slightly above ₹12 lakh. The rebate does not apply to special rate income, such as tax on short term capital gains under section 111A, so read the conditions before relying on it. See our article on the section 87A rebate for a full explanation.

Exemption vs deduction vs rebate: comparison table

Feature Exemption Deduction Rebate
Meaning A specific income is tax-free An amount subtracted from income An amount subtracted from tax
Stage Before total income is arrived at Before taxable income is arrived at After tax is computed
Effect Income is not taxed at all Reduces taxable income Reduces tax payable
Examples Agricultural income, HRA Section 80C, 80D, 80E Section 87A
Most are available in Mostly the old regime Mostly the old regime Both regimes

A note on tax deducted at source (TDS) and tax relief

Rebate, deduction and exemption are not the same as TDS. TDS is tax collected in advance by the payer, such as an employer or bank, on salary, interest, commission, rent or professional fees. It is later adjusted against your final tax, and any excess is refunded to you.

“Tax relief” is a general term for any provision that lowers your tax, including the three above and relief for double taxation. “Tax benefit” is used in the same loose way.

Which is better?

All three help, but they act differently. An exemption removes income completely. A deduction saves tax at your slab rate. A rebate saves a fixed amount of tax. Because most deductions and exemptions work only in the old regime, compare your tax under both regimes every year.

Frequently asked questions

What is the difference between a deduction and an exemption?

An exemption excludes a specific income from tax, for example agricultural income. A deduction is subtracted from your income, for example the section 80C deduction, to reach taxable income.

What is a tax rebate?

A rebate reduces the tax computed on your taxable income. Section 87A is the common example.

Is a rebate the same as a refund?

No. A rebate cuts your tax liability before you pay. A refund is money returned to you when your tax paid or deducted is more than your tax liability.

Which comes first in the calculation?

Exemptions are left out of income first, then deductions are subtracted, tax is calculated on the taxable income, and the rebate is applied to that tax.

Official sources

Related reading

Disclaimer

This article is for general informational purposes only and should not be considered professional advice. Please consult a qualified expert for advice tailored to your specific situation. The author and website owner are not liable for any errors or actions based on this content.

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Section 80EE: Extra Deduction of Up to ₹50,000 on Home Loan Interest

Posted on by CA Meet Dhrangadhariya

Last updated: 26 September 2026 · Written and reviewed by CA Meet Dhrangadhariya, CSM & Co LLP

Quick summary

  • Section 80EE gives first-time home buyers an extra deduction of up to ₹50,000 a year on home loan interest, on top of the ₹2 lakh under section 24(b).
  • It applies only to loans sanctioned between 01/04/2016 and 31/03/2017, for a house worth up to ₹50 lakh with a loan up to ₹35 lakh, if you owned no house on the sanction date.
  • The deduction can still be claimed each year while that loan runs, only in the old tax regime.
  • From Tax Year 2026-27 it is section 130 of the Income-tax Act, 2025.

Section 80EE gave first-time home buyers an extra deduction of up to ₹50,000 a year on home loan interest. It was a limited-period scheme for loans sanctioned in FY 2016-17, but if you have such a loan you can still claim it every year until the loan ends, if you are in the old tax regime.

From Tax Year 2026-27 the provision is section 130 of the Income-tax Act, 2025. For FY 2025-26 (assessment year 2026-27) it is still section 80EE of the 1961 Act.

Conditions

  • Only an individual can claim (resident or non-resident). HUFs, firms and companies cannot.
  • The loan must be taken from a financial institution (a bank or housing finance company) to buy a residential house in India.
  • The loan must have been sanctioned between 01/04/2016 and 31/03/2017.
  • The loan amount must not exceed ₹35 lakh.
  • The value of the house must not exceed ₹50 lakh.
  • You must not have owned any residential house on the date the loan was sanctioned.
  • The same interest cannot be claimed under another section for that year or any other year.
  • It is available only in the old tax regime.

How much?

Up to ₹50,000 a year. Claim the interest first under section 24(b) (section 22 in the 2025 Act), which allows up to ₹2 lakh for a self-occupied house. If the interest is more, the balance can be claimed under 80EE, up to ₹50,000, so the total is up to ₹2,50,000. The total cannot exceed the interest you actually pay.

For a let-out house section 24(b) has no ₹2 lakh ceiling on interest, though the loss from house property that can be set off against other income is limited to ₹2 lakh a year.

Examples

  1. Sunita bought her first home for ₹45 lakh with a loan of ₹30 lakh sanctioned on 15/01/2017. She owned no house. She can claim up to ₹50,000 under section 80EE each year for the interest in excess of the section 24(b) limit.
  2. Rohan paid ₹2,40,000 as interest in a year. He claims ₹2,00,000 under section 24(b) and the remaining ₹40,000 under section 80EE. Total ₹2,40,000.
  3. Sonia’s house cost ₹52 lakh. She cannot claim, because the value exceeds ₹50 lakh.
  4. Ajay’s loan was ₹38 lakh. He cannot claim, because the loan exceeds ₹35 lakh.
  5. Two friends buy their first home together, each with a loan of ₹15 lakh, for a house worth ₹40 lakh. If each meets the conditions, each can claim up to ₹50,000.

Documents

  • The interest certificate from the lender, showing the principal and interest for the year.
  • The sanction letter and loan agreement, showing the sanction date and amount.
  • Papers that show the value of the house.

Section 24(b) vs section 80EE

Feature Section 24(b) Section 80EE
Interest allowed Up to ₹2 lakh for self-occupied house Extra up to ₹50,000
Who Individuals and HUFs Individuals only
Loan period Any Sanctioned 01/04/2016 to 31/03/2017
House value and loan limits None ₹50 lakh and ₹35 lakh
Regime Self-occupied house: old regime only. Let-out house: interest is also allowed in the new regime Old regime only

Section 80EE vs section 80EEA

Basis Section 80EE Section 80EEA
Loan sanctioned 01/04/2016 to 31/03/2017 01/04/2019 to 31/03/2022
Deduction ₹50,000 ₹1,50,000
Loan limit ₹35 lakh No limit
House value ₹50 lakh Stamp duty value up to ₹45 lakh

In the 2025 Act, section 80EE is section 130 and section 80EEA is section 131.

Frequently asked questions

Can I claim section 80EE for a loan taken now?

No. It is only for loans sanctioned between 01/04/2016 and 31/03/2017. If your loan was sanctioned then and meets the conditions, you can still claim it each year.

What is the limit under section 80EE?

₹50,000 a year, in addition to section 24(b).

Who can claim 80EE?

Only individuals who owned no residential house on the date the loan was sanctioned. HUFs and companies cannot.

Is it available if the house is let out?

The section does not require self-occupation, but the interest cannot be claimed twice under different sections.

Is section 80EE available in the new tax regime?

No. It is available only in the old tax regime.

Official sources

Related reading

Disclaimer

This article is for general informational purposes only and should not be considered professional advice. Please consult a qualified expert for advice tailored to your specific situation. The author and website owner are not liable for any errors or actions based on this content.

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Section 80DDB: Deduction for Medical Treatment of Specified Diseases

Posted on by CA Meet Dhrangadhariya

Last updated: 06 September 2026 · Written and reviewed by CA Meet Dhrangadhariya, CSM & Co LLP

Quick summary

  • Section 80DDB allows a deduction for the amount actually paid on treatment of specified serious diseases, up to ₹40,000, or up to ₹1,00,000 if the patient is a senior citizen.
  • The deduction is reduced by any amount received from insurance or reimbursed by an employer, so only your net out-of-pocket cost counts.
  • It covers you and your dependants (spouse, children, parents, brothers and sisters), and needs a prescription from the specialist named in the rules.
  • From Tax Year 2026-27 it is section 128 of the Income-tax Act, 2025, and it is available only in the old tax regime.

How to claim the section 80DDB deduction

1. Check that the illness is on the specified list
↓
2. Get a prescription from the specialist named for that disease
↓
3. Pay the treatment cost and keep the bills
↓
4. Reduce the claim by insurance or employer reimbursement
↓
5. Claim the balance, up to ₹40,000 or ₹1,00,000, in the old regime

Treating a serious illness is expensive. Section 80DDB lets a resident individual or HUF deduct what they actually pay on the treatment of certain specified diseases, up to a limit. It reduces taxable income, and is available only under the old tax regime.

From Tax Year 2026-27 the provision is section 128 of the Income-tax Act, 2025. For FY 2025-26 (assessment year 2026-27) it is section 80DDB of the 1961 Act.

Who can claim?

  • A resident individual, for treatment of self or a dependant.
  • A HUF, for treatment of any of its members.
  • A dependant means the spouse, children, parents, brothers and sisters of the individual. Companies and other entities cannot claim.

Deduction limit

Patient Maximum deduction
Under 60 years ₹40,000
Senior citizen (60 or more at any time during the year) ₹1,00,000

The deduction is the amount actually paid or the limit, whichever is less. It is then reduced by any amount received under an insurance policy or reimbursed by an employer for that treatment.

Examples

  1. You pay ₹80,000 for treatment and get ₹30,000 from the insurer. For a patient under 60, the limit is ₹40,000 (less than the ₹80,000 paid), so the deduction is ₹40,000 less ₹30,000, which is ₹10,000. For a senior citizen the amount paid (₹80,000) is less than the limit of ₹1,00,000, so the deduction is ₹80,000 less ₹30,000, which is ₹50,000.
  2. You pay ₹80,000 and the insurer pays ₹60,000. For a patient under 60 it is ₹40,000 less ₹60,000, so there is no deduction. For a senior citizen it is ₹80,000 less ₹60,000, which is ₹20,000.

In short, take the lower of the amount paid and the limit, then subtract what the insurer or employer paid.

Diseases covered and who must prescribe

Disease Specialist who must prescribe
Specified neurological diseases where disability is 40% or more: dementia, dystonia musculorum deformans, motor neuron disease, ataxia, chorea, hemiballismus, aphasia and Parkinson’s disease Neurologist with D.M. in Neurology
Malignant cancers Oncologist with D.M. in Oncology
Full blown AIDS Any specialist with a post-graduate degree in General or Internal Medicine
Chronic renal failure Nephrologist with D.M. in Nephrology, or urologist with M.Ch. in Urology
Haemophilia and thalassaemia Specialist with D.M. in Haematology

An equivalent degree recognised by the Medical Council of India is also accepted. If the patient is treated in a government hospital, a full-time specialist of that hospital with a post-graduate degree in General or Internal Medicine (or equivalent) can give the prescription.

What should the prescription show?

  • The patient’s name and age.
  • The disease or ailment.
  • The name, address, registration number and qualification of the specialist.
  • For a government hospital, the hospital’s name and address.

How to claim

  1. Keep the specialist’s prescription and the bills.
  2. Subtract any insurance claim or employer reimbursement.
  3. Report the net amount, within the limit, in the deductions section of your return.
  4. Choose the old regime. The deduction is not available in the new regime.

Frequently asked questions

What is the limit under section 80DDB?

₹40,000, or ₹1,00,000 if the patient is a senior citizen (60 or more at any time during the year). The claim is the amount paid or the limit, whichever is less, reduced by any insurance or reimbursement.

Which diseases are covered?

Specified neurological diseases (with 40% or more disability), malignant cancers, full blown AIDS, chronic renal failure, and haemophilia and thalassaemia.

Is a prescription needed?

Yes, from the specialist named in the rules for that disease. If treated in a government hospital, a full-time specialist of that hospital can give it.

Who counts as a dependant?

The spouse, children, parents, brothers and sisters of an individual, or a member of a HUF.

Is section 80DDB available in the new tax regime?

No. It is available only in the old tax regime.

Official sources

Related reading

Disclaimer

This article is for general informational purposes only and should not be considered professional advice. Please consult a qualified expert for advice tailored to your specific situation. The author and website owner are not liable for any errors or actions based on this content.

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Section 80DD: Deduction for Dependant with Disability, Limit and Who Can Claim

Posted on by CA Meet Dhrangadhariya

Last updated: 11 July 2026 · Written and reviewed by CA Meet Dhrangadhariya, CSM & Co LLP

Quick summary

  • Section 80DD gives a resident individual or HUF a flat deduction of ₹75,000 for a dependant with disability (40% or more), or ₹1,25,000 for severe disability (80% or more).
  • It does not depend on the actual amount spent, but you must have spent on the dependant’s medical treatment, nursing, training or rehabilitation, or paid into an approved insurer scheme for their maintenance.
  • The dependant is the spouse, children, parents, brothers or sisters, and cannot be someone who claims section 80U for themselves.
  • From Tax Year 2026-27 the provision is section 127 of the Income-tax Act, 2025. It is available only in the old tax regime.

Section 80DD helps families who look after a dependant with a disability. A resident individual or Hindu undivided family (HUF) gets a fixed deduction from income, whatever the actual expense, provided they spent on the dependant’s care or paid into an approved scheme for the dependant’s future. It is available only under the old tax regime.

From Tax Year 2026-27 the provision is section 127 of the Income-tax Act, 2025. For FY 2025-26 (assessment year 2026-27) it is still section 80DD of the 1961 Act.

Amount of deduction

Disability of the dependant Deduction
40% or more, but less than 80% ₹75,000
Severe disability: 80% or more, including autism, cerebral palsy and multiple disabilities certified as severe ₹1,25,000

The amount is fixed. You do not need bills for the amount you claim, but you must actually have incurred the spending, or paid the scheme premium, in that year.

Conditions

  • The claimant must be a resident individual or HUF.
  • The dependant is, for an individual, the spouse, children, parents, brothers and sisters. For a HUF, it is a member of the HUF. The dependant must be dependent wholly or mainly on the claimant.
  • The claim is for a dependant, not for yourself. If you have a disability yourself, see section 80U.
  • The dependant must not claim a deduction under section 80U (section 154 in the new Act) for themselves. If they do, 80DD cannot be claimed for them.
  • You must either (a) spend on medical treatment (including nursing), training and rehabilitation of the dependant, or (b) pay or deposit an amount under an approved scheme of the Life Insurance Corporation or another insurer for the dependant’s maintenance.
  • For the insurance route, the scheme must pay an annuity or lump sum to the dependant on your death, or when you reach 60, and you must name the dependant (or a trust or other person for the dependant) to receive it.

Disabilities covered

The disability must be certified by the medical authority. The list includes blindness, low vision, leprosy-cured, hearing impairment, locomotor disability, mental retardation, mental illness, autism, cerebral palsy and multiple disabilities.

Certificate and documents

  • The disability must be certified by the prescribed medical authority, such as a civil surgeon or chief medical officer of a government hospital, or a specialist neurologist where the rules provide.
  • A copy of the certificate must be furnished with your return of income. Up to FY 2025-26 the form for autism, cerebral palsy and multiple disability was Form 10-IA. Under the Income-tax Rules, 2026 the certificate form is Form 30.
  • If the certificate says the disability needs reassessment after a period, the deduction stops after the year the certificate expires, until you furnish a new certificate.
  • If you claim the insurance route, keep the premium receipts and the policy terms.

Section 80DD vs section 80U

Basis Section 80DD Section 80U
Who claims A resident individual or HUF who supports a dependant with disability A resident individual with disability, for themselves
Amount ₹75,000, or ₹1,25,000 for severe disability ₹75,000, or ₹1,25,000 for severe disability
Both for the same person? Not allowed Not allowed
Regime Old regime only Old regime only

If the dependant dies first

If the dependant dies before you, the amount paid or deposited under the insurance scheme is treated as your income of the year in which you receive it, and is taxed.

Remember

The deduction is in addition to other deductions such as section 80C or 80D. Check your tax under both regimes, because 80DD, like most deductions, is lost in the new regime.

Frequently asked questions

How much is the deduction under section 80DD?

₹75,000 if the dependant has a disability of 40% or more, and ₹1,25,000 if the disability is severe (80% or more). It is a fixed amount, not the actual expense.

Who is a dependant for section 80DD?

For an individual, the spouse, children, parents, brothers and sisters. For a HUF, a member of the HUF.

Can I claim 80DD if the dependant claims section 80U?

No. If the dependant claims 80U for themselves, you cannot claim 80DD for the same person.

Is a medical certificate needed?

Yes. A certificate from the prescribed medical authority has to be furnished with the return.

Is section 80DD available in the new tax regime?

No. It is available only in the old tax regime.

Official sources

Related reading

Disclaimer

This article is for general informational purposes only and should not be considered professional advice. Please consult a qualified expert for advice tailored to your specific situation. The author and website owner are not liable for any errors or actions based on this content.

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Standard Deduction for Salaried Individuals in New and Old Tax Regime

Posted on by CA Meet Dhrangadhariya

Last updated: 15 September 2026 · Written and reviewed by CA Meet Dhrangadhariya, CSM & Co LLP

Quick summary

  • The standard deduction is a flat amount subtracted from salary or pension income without any proof of expenses.
  • It is ₹75,000 in the new tax regime and ₹50,000 in the old regime, and cannot exceed your salary or pension income.
  • For family pension the deduction is ₹25,000 in the new regime and ₹15,000 in the old regime.
  • From Tax Year 2026-27 it is allowed under section 19 of the Income-tax Act, 2025.

The standard deduction is a fixed amount that salaried employees and pensioners can subtract from their income without producing any bills or proof. It was removed years ago, brought back in Budget 2018, and has been increased since, most recently in the new regime to ₹75,000.

Amount of standard deduction

Regime Salary or pension Family pension
New tax regime (default) ₹75,000 ₹25,000
Old tax regime ₹50,000 ₹15,000

In each case the deduction cannot exceed the salary or pension you actually received. These amounts apply to FY 2025-26 and to Tax Year 2026-27. The Union Budget 2026 did not change income tax rates or slabs for Tax Year 2026-27, and the standard deduction stayed as it was.

Which section gives it?

For FY 2025-26 (assessment year 2026-27) it is section 16(ia) of the Income-tax Act, 1961, whose proviso substituting ₹75,000 for the new regime applies from 01/04/2025. For Tax Year 2026-27 onwards it is section 19 of the Income-tax Act, 2025, which lists all the deductions from salary in one place.

Who can claim?

  • Employees who earn salary income, in private or government jobs.
  • Pensioners, since pension is taxed as salary.
  • Recipients of family pension, at the lower family pension amount.

It is not available for business or professional income, or to someone with no salary or pension.

Why does it matter?

  • It reduces taxable income automatically, so it lowers the tax of nearly every salaried person.
  • No documents are needed.
  • It is available in both regimes, so it does not change the choice between them, but the new regime’s higher amount is one reason many salaried taxpayers find it cheaper.

Example

Ms C earns a salary of ₹9,00,000 in FY 2025-26 and has no other income. In the new regime her taxable income is ₹9,00,000 less ₹75,000, which is ₹8,25,000. In the old regime it would be ₹8,50,000 before any other deductions.

What about the documents for filing the return?

You need no proof for the standard deduction. For the return as a whole, you should still keep Form 16, Form 26AS, the AIS and any proofs for other deductions you claim.

Frequently asked questions

What is the standard deduction for salaried employees?

₹75,000 in the new tax regime and ₹50,000 in the old tax regime, or the amount of your salary if that is less.

Do I need documents to claim the standard deduction?

No. It is allowed automatically on salary and pension income, without proof of any expense.

Can pensioners claim the standard deduction?

Yes. Pension is taxed as salary, so pensioners can claim it. Family pension has a separate deduction of ₹25,000 in the new regime and ₹15,000 in the old regime.

Can a self-employed person claim the standard deduction?

No. It is only for income taxed as salary or pension.

Which section gives the standard deduction now?

Section 19 of the Income-tax Act, 2025 from Tax Year 2026-27. Earlier it was section 16(ia).

Official sources

Related reading

Disclaimer

This article is for general informational purposes only and should not be considered professional advice. Please consult a qualified expert for advice tailored to your specific situation. The author and website owner are not liable for any errors or actions based on this content.

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Income Tax Rebate Under Section 87A

Posted on by CA Meet Dhrangadhariya

Last updated: 17 July 2026 · Written and reviewed by CA Meet Dhrangadhariya, CSM & Co LLP

Quick summary

  • Section 87A gives resident individuals a rebate of up to ₹60,000 in the new regime for total income up to ₹12 lakh, so no tax is payable.
  • In the old regime the rebate is up to ₹12,500 for total income up to ₹5 lakh.
  • Marginal relief in the new regime protects taxpayers whose income is only slightly above ₹12 lakh; the old regime has none.
  • The rebate is not available against tax on special-rate capital gains in the new regime, and it is calculated before the 4% cess.

How the section 87A rebate works

1. Compute total income after the deductions allowed in your regime
↓
2. Check the limit: ₹12 lakh in the new regime, ₹5 lakh in the old regime
↓
3. Compute tax on the slab rates before cess
↓
4. Rebate is the lower of the tax and ₹60,000 (new) or ₹12,500 (old)
↓
5. If income is just above ₹12 lakh in the new regime, apply marginal relief
↓
6. Add 4% health and education cess on the tax that remains

A rebate under section 87A is a reduction in tax for resident individuals whose total income is within a set limit. Under the new tax regime the rebate is up to ₹60,000 for a total income up to ₹12 lakh, so no tax is payable. Under the old tax regime the rebate is up to ₹12,500 for a total income up to ₹5 lakh. These limits applied to FY 2025-26 (AY 2026-27). Budget 2026 did not change the slab rates, so the same limits are being applied for Tax Year 2026-27.

What is Rebate Under Section 87A?

  • The rebate is a relief for low and middle income earners. It is available only to resident individuals.
  • It reduces the income tax payable, calculated on the slab rates before adding the 4% health and education cess.
  • If the rebate equals the tax payable, the taxpayer pays no income tax at all.
  • It is not available to HUFs, companies, firms or non-residents.

Eligibility Criteria for Rebate

  1. Only resident individuals are eligible.
  2. The total income, after the deductions allowed in the regime chosen, must not exceed:
    - ₹12 lakh under the new tax regime, or
    - ₹5 lakh under the old tax regime.
  3. The rebate is the lower of the limit (₹60,000 or ₹12,500) and the tax payable before cess.
  4. Under the new regime the rebate cannot be used against tax on capital gains taxed at special rates (sections 111A, 112 and 112A).

Section 87A Rebate Limit: New vs Old Tax Regime

Particulars New regime Old regime
Total income limit ₹12,00,000 ₹5,00,000
Maximum rebate ₹60,000 ₹12,500
Standard deduction for salaried and pensioners ₹75,000 ₹50,000
Marginal relief available Yes No

Because the standard deduction in the new regime is ₹75,000, a salaried taxpayer with a salary of up to ₹12,75,000 and no other income has a taxable income of ₹12 lakh or less and pays no tax.

Why ₹12 lakh gives nil tax in the new regime

Slab Rate Tax
Up to ₹4,00,000 Nil 0
₹4,00,001 to ₹8,00,000 5% 20,000
₹8,00,001 to ₹12,00,000 10% 40,000
Total tax on ₹12,00,000 60,000
Less: rebate 60,000
Tax payable 0

How to Claim the Rebate

  1. Calculate your gross total income for the year.
  2. Reduce the deductions allowed in the regime you have chosen.
  3. Arrive at your total income and compare it with the limit (₹12 lakh or ₹5 lakh).
  4. File your return with the correct income and deductions.
  5. The income tax portal calculates the rebate automatically if your income is within the limit.

Examples

1. New tax regime

Particulars Amount (₹)
Total income 12,00,000
Tax as per slab rates 60,000
Less: rebate under section 87A 60,000
Tax payable 0

Deductions such as section 80C are not available in the new regime.

2. Old tax regime

Particulars Amount (₹)
Gross total income 6,50,000
Less: deduction under section 80C 1,50,000
Total income 5,00,000
Tax as per slab rates 12,500
Less: rebate under section 87A 12,500
Tax payable 0

Incomes Not Eligible for the Rebate

The rebate cannot be claimed against tax on:

  • Long-term capital gains under section 112A and other capital gains taxed at special rates (new regime).
  • Short-term capital gains on listed equity under section 111A (new regime).
  • Income taxed at special rates, such as winnings from lotteries and games.

Marginal Relief in the New Tax Regime

If the total income is slightly above ₹12 lakh, the tax can be higher than the extra income earned above ₹12 lakh. Marginal relief makes sure the tax payable is not more than that extra income.

How to calculate it:

  1. Find the excess over ₹12 lakh (total income minus ₹12,00,000). Call it A.
  2. Compute the tax on the total income before cess. Call it B.
  3. If B is more than A, the rebate is B minus A, and the tax payable equals A.

Example

Mr. Ravi, a resident, has a total income of ₹12,15,000 in the new tax regime.

Step Amount (₹)
Excess over ₹12,00,000 (A) 15,000
Tax on ₹12,15,000 before cess (B): 60,000 on the first ₹12 lakh plus 15% of 15,000 62,250
Rebate (B minus A) 47,250
Tax payable before cess (equal to the excess income of ₹15,000) 15,000
Add: health and education cess at 4% 600
Total tax liability 15,600

The old regime has no marginal relief, so a taxable income just above ₹5 lakh loses the whole ₹12,500 rebate at once.

Section 87A and the Income-tax Act, 2025 (now section 156)

The Income-tax Act, 2025 applies from 1 April 2026, and the rebate of section 87A is now in section 156. Sub-section (1) gives the rebate of up to ₹12,500 where total income does not exceed ₹5 lakh. Sub-section (2) gives the rebate of up to ₹60,000 where total income does not exceed ₹12 lakh and the tax is computed on the new regime slab rates of section 202. For income earned up to 31 March 2026 (FY 2025-26, AY 2026-27) the Income-tax Act, 1961 and its section 87A still apply. The rules described here are the same under both Acts.

Frequently asked questions

Who can claim the rebate under section 87A?

Only resident individuals whose total income is within ₹12 lakh in the new tax regime or ₹5 lakh in the old tax regime. HUFs, companies, firms and non-residents cannot claim it.

How much is the section 87A rebate?

Up to ₹60,000 in the new tax regime and up to ₹12,500 in the old tax regime, limited to the tax payable before cess.

Is there tax if my income is ₹12 lakh in the new regime?

No. Tax on ₹12 lakh is ₹60,000 and the rebate of ₹60,000 brings it to nil. A salaried taxpayer with a salary up to ₹12,75,000 also pays no tax after the ₹75,000 standard deduction.

What is marginal relief on the rebate?

If income is slightly above ₹12 lakh in the new regime, marginal relief limits the tax to the amount of income above ₹12 lakh. The old regime has no marginal relief.

Official sources

Related reading

Disclaimer

This article is for general informational purposes only and should not be considered professional advice. Please consult a qualified expert for advice tailored to your specific situation. The author and website owner are not liable for any errors or actions based on this content.

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Section 80TTA vs 80TTB: Key Differences, Benefits and How to Claim

Posted on by CA Meet Dhrangadhariya

Last updated: 27 September 2026 · Written and reviewed by CA Meet Dhrangadhariya, CSM & Co LLP

Quick summary

  • Section 80TTA gives individuals and HUFs a deduction of up to ₹10,000 on savings account interest.
  • Section 80TTB gives resident senior citizens (age 60 or more) up to ₹50,000 on interest from savings accounts, fixed deposits and recurring deposits. A senior citizen cannot claim 80TTA.
  • Both are available only in the old tax regime, and both appear as section 153 of the Income-tax Act, 2025 from Tax Year 2026-27.
  • The deduction is not automatic: enter it in your return.

Section 80TTA and section 80TTB give a deduction on interest earned from bank and post office deposits. They are alternatives. 80TTA is for everyone else and is smaller, while 80TTB is only for senior citizens and is wider and larger. Both are available only in the old tax regime.

What is section 80TTA?

Section 80TTA allows an individual or HUF a deduction of up to ₹10,000 (or the actual interest, if less) on interest from a savings account with a bank, a co-operative bank or a post office. It does not cover interest on fixed deposits or recurring deposits. A senior citizen who claims section 80TTB cannot claim 80TTA.

What is section 80TTB?

Section 80TTB allows a resident senior citizen a deduction of up to ₹50,000 (or the actual interest, if less) on interest from savings accounts and time deposits, including fixed deposits and recurring deposits, with a bank, a co-operative bank or a post office.

A senior citizen here means a resident individual who is 60 or more at any time during the year.

Key differences

Basis Section 80TTA Section 80TTB
Who can claim Individuals and HUFs (not senior citizens claiming 80TTB) Resident senior citizens, age 60 or more
Maximum deduction ₹10,000 or actual interest, whichever is less ₹50,000 or actual interest, whichever is less
Interest covered Savings account Savings account, fixed deposit, recurring deposit
Institutions Bank, co-operative bank, post office Bank, co-operative bank, post office
Regime Old regime only Old regime only

Example

Mr B is 59 years old on 01/04/2025 and turns 60 on 15/01/2026. In FY 2025-26 he earns ₹7,000 as savings account interest and ₹20,000 as FD interest.

  • Because he is 60 at some point during FY 2025-26, he is a senior citizen for that year. He can claim 80TTB on the full ₹27,000 (below the ₹50,000 limit).
  • If he were still under 60 throughout the year, he could claim only 80TTA on the ₹7,000 savings interest, and nothing on the FD interest.

New regime

Neither section is available if you choose the new tax regime. Interest income is then simply taxed at slab rates.

Income-tax Act, 2025

From Tax Year 2026-27 both deductions are found in section 153 of the Income-tax Act, 2025, with the same limits. Budget 2025 raised the TDS threshold on interest (₹50,000 for others and ₹1,00,000 for senior citizens), but that only affects when TDS is deducted. It does not change the 80TTA and 80TTB limits.

How to claim

The deduction is not given automatically. Check your interest in the bank statements and the Annual Information Statement (AIS), then enter the amount in the deductions schedule of your return. Keep the interest certificates from the bank or post office.

Frequently asked questions

Who can claim section 80TTA?

Individuals and HUFs who are not claiming section 80TTB, up to ₹10,000 on interest from savings accounts with a bank, co-operative bank or post office.

Who can claim section 80TTB?

Only resident individuals aged 60 or more at any time during the year, up to ₹50,000 on interest from savings and time deposits.

Can a senior citizen claim both?

No. A senior citizen claims 80TTB and cannot claim 80TTA.

Is FD interest covered by section 80TTA?

No. Only savings account interest is covered. FD and RD interest qualifies only for senior citizens under 80TTB.

Are these deductions available in the new regime?

No. Both are available only in the old tax regime.

Official sources

Related reading

Disclaimer

This article is for general informational purposes only and should not be considered professional advice. Please consult a qualified expert for advice tailored to your specific situation. The author and website owner are not liable for any errors or actions based on this content.

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Section 80E of Income Tax Act: Deduction for Interest on Education Loan

Posted on by CA Meet Dhrangadhariya

Last updated: 15 September 2026 · Written and reviewed by CA Meet Dhrangadhariya, CSM & Co LLP

Quick summary

  • Section 80E allows a deduction for the full interest paid on a higher education loan, with no upper limit.
  • It is available only to individuals, for 8 years from the year interest payment starts (or until the loan is repaid, if sooner), and only in the old tax regime.
  • The loan must be from a bank, notified financial institution or approved charitable institution, for yourself, your spouse, children or a student you are legal guardian of.
  • Only interest counts, not the principal. From Tax Year 2026-27 the provision is section 129 of the Income-tax Act, 2025.

Section 80E allows an individual to deduct the interest paid on an education loan taken for higher studies, whether for self or for close family. There is no maximum amount, but the deduction runs for a limited period and is available only under the old tax regime.

What is section 80E?

Section 80E is a deduction from total income for the interest part of the EMIs you pay on a loan taken for higher education. The principal repaid is not deductible under this section.

From Tax Year 2026-27 the same deduction is found in section 129 of the Income-tax Act, 2025. For FY 2025-26 (assessment year 2026-27) it is still section 80E of the 1961 Act.

Eligibility for the 80E deduction

  • Only individuals can claim it. HUFs, firms and companies cannot.
  • The loan must be taken for higher education of yourself, your spouse, your children, or a student for whom you are the legal guardian.
  • The loan must be taken from a bank or other financial institution, or from an approved charitable institution. A loan from friends or relatives does not qualify.
  • You must be the borrower, and the interest must actually have been paid out of your income.
  • It is available only under the old tax regime.

Which courses count as higher education?

Any course after passing the senior secondary examination (Class 12) or its equivalent, regular or vocational, in India or abroad.

How much can you claim?

The whole interest paid in the year. For example, if your income after other deductions is ₹6,70,000 and you paid ₹2,00,000 as interest on the education loan, your taxable income becomes ₹4,70,000.

For how many years?

The deduction starts in the year you begin paying interest and continues for 8 years in total, or until the interest is fully repaid, whichever is earlier. If you repay the loan in five years, you can claim for those five years only. If repayment runs beyond eight years, there is no deduction for the later years.

Documents needed

Get an interest certificate from the lender each year. It should show the interest and principal parts of the EMIs paid in that financial year separately. Keep it for your records, and give it to your employer if you want TDS adjusted.

Should you repay early?

Interest saved by repaying early is usually larger than the tax saved by claiming 80E. A deduction reduces your tax only by your slab rate (for example 30% plus cess), while the interest costs you 100%. So the tax benefit alone is not a reason to delay repayment. Consider the loan interest rate, your other investments and your cash needs, and prepay if the interest rate is higher than what you can safely earn elsewhere.

Old regime or new regime?

The new tax regime does not allow section 80E. If education loan interest is large, compare your tax under both regimes before you choose.

Frequently asked questions

Is there a limit on the section 80E deduction?

No. The whole interest paid in the year is deductible. Only the interest counts, not the principal.

For how many years can I claim section 80E?

For up to 8 years starting from the year in which you begin paying the interest, or until the interest is fully paid, whichever is earlier.

Who can claim section 80E?

Only individuals, for a loan taken for higher education of self, spouse, children or a student for whom they are the legal guardian. HUFs and companies cannot.

Does a loan from a relative or friend qualify?

No. The loan must be from a bank, a notified financial institution or an approved charitable institution.

Is section 80E available in the new tax regime?

No. It is allowed only in the old tax regime.

Official sources

Related reading

Disclaimer

This article is for general informational purposes only and should not be considered professional advice. Please consult a qualified expert for advice tailored to your specific situation. The author and website owner are not liable for any errors or actions based on this content.

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Section 80RRB: Deduction for Royalty Income from Patents

Posted on by CA Meet Dhrangadhariya

Last updated: 14 August 2026 · Written and reviewed by CA Meet Dhrangadhariya, CSM & Co LLP

Quick summary

  • Section 80RRB gives a resident individual patentee a deduction of the lower of the royalty income and ₹3,00,000 on royalty from a patent registered on or after 01/04/2003.
  • The claimant must be the patentee, that is the true and first inventor recorded as patentee, including a joint patentee.
  • The certificate (Form 10CCE, now Form 37) must be filed with the return, and the deduction is available only in the old tax regime.
  • From Tax Year 2026-27 it is section 152 of the Income-tax Act, 2025.

An inventor who earns royalty from a patent gets a deduction under section 80RRB, up to ₹3,00,000 a year. From Tax Year 2026-27 the provision is section 152 of the Income-tax Act, 2025. For FY 2025-26 (assessment year 2026-27) it is still section 80RRB of the 1961 Act.

Who can claim?

An individual who:

  • is resident in India,
  • is a patentee, and
  • receives royalty on a patent registered on or after 1 April 2003 under the Patents Act, 1970, and has that royalty included in gross total income.

A patentee is the true and first inventor recorded as the patentee under the Patents Act, and this includes joint patentees recorded as true and first inventors. Someone who bought or licensed a patent is not a patentee. HUFs, companies and non-residents are out.

What counts as royalty?

Royalty on a patent means consideration for transferring any or all rights in the patent (including granting a licence), giving information about the working or use of the patent, using the patent, or services connected with these. It does not include consideration that is capital gains, or the price for selling a product made with a patented process or the patented article for commercial use. A non-returnable advance counts as a lump sum.

How much is the deduction?

The lower of the royalty income included in gross total income and ₹3,00,000. If a compulsory licence has been granted under the Patents Act, the royalty counted cannot be more than the royalty fixed by the Controller of Patents.

Royalty from abroad

Income from a source outside India counts only to the extent it is brought into India in convertible foreign exchange within six months from the end of the tax year in which it is earned, or within any further period the Reserve Bank of India or other competent authority allows. A certificate from the prescribed authority must be filed with the return.

Certificates and forms

  • Up to FY 2025-26: the certificate in Form 10CCE, signed by the prescribed authority, filed with the return.
  • Under the Income-tax Rules, 2026 (from 01/04/2026): Form 37 (Rule 71) is the certificate for the patent royalty, and Form 38 (Rule 72) is the certificate for income from outside India, which comes from the RBI or another authorised authority.

No double deduction

If a deduction has been allowed for a year on this income, the same income cannot be deducted under any other provision of the Act in any year.

Old regime only

The deduction is not allowed in the new tax regime. Section 202 of the 2025 Act disallows Chapter VIII deductions other than sections 124(1), 124(2), 125(2) and 146.

Example

Meera is a resident individual and the registered patentee of a process patent granted in 2018. In the year she receives ₹4,00,000 as royalty from a licensee and has spent ₹50,000 on professional fees related to earning it.

Item Amount in ₹
Royalty received 4,00,000
Less: expenses allowed 50,000
Royalty income in gross total income 3,50,000
Deduction under section 80RRB (lower of 3,50,000 and 3,00,000) 3,00,000
Income left after the deduction 50,000

Her ₹50,000 is taxed at her normal slab rates, along with any other income.

How it differs from section 80QQB

Basis Section 80QQB (section 151) Section 80RRB (section 152)
Income Royalty from books, in the exercise of the profession of an author Royalty from a registered patent
Claimant Resident individual author Resident individual patentee
Limit Lower of income and ₹3,00,000 Lower of income and ₹3,00,000
Certificate Form 10CCD, now Form 36 Form 10CCE, now Form 37
Regime Old regime only Old regime only

Frequently asked questions

Who can claim section 80RRB?

A resident individual who is a patentee and receives royalty on a patent registered under the Patents Act, 1970 on or after 01/04/2003. HUFs and non-residents cannot claim it.

How much is the deduction?

The lower of the royalty income and ₹3,00,000 in a year.

Who counts as a patentee?

The true and first inventor recorded as the patentee under the Patents Act, 1970, including joint patentees recorded as true and first inventors. A person who merely bought or licensed the patent does not qualify.

Does the sale of a patented product count as royalty?

No. Consideration for selling a product made with a patented process, or the patented article, for commercial use is excluded, as is anything that is capital gains.

Is it available in the new tax regime?

No. It is available only in the old tax regime.

Official sources

Disclaimer

This article is for general informational purposes only and should not be considered professional advice. Please consult a qualified expert for advice tailored to your specific situation. The author and website owner are not liable for any errors or actions based on this content.

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