New Delhi, February 1: The Union Budget 2026 has kept the Section 87A income tax rebate unchanged under the new tax regime, offering no additional relief to taxpayers despite expectations of a hike. As in FY 2025–26, resident individuals with net taxable income up to INR 12 lakh can continue to claim a maximum rebate of INR 60,000, effectively reducing their tax liability on regular income to zero up to this threshold.

The rebate remains available only to resident individuals. It does not apply to Hindu Undivided Families (HUFs), Non-Resident Indians (NRIs), companies, or super senior citizens. Budget 2026 Highlights: FM Nirmala Sitharaman Raises Capital Expenditure for FY27 by About 9% to INR 12.2 Lakh Crore.

Certain income categories continue to be excluded from the Section 87A rebate. These include long-term capital gains (LTCG) from listed equity shares and equity mutual funds (though gains up to INR 1.25 lakh remain tax-free under separate provisions), short-term capital gains (STCG) from equity sales under the new regime, and incomes from gambling, online gaming, and virtual digital assets, which are taxed at special rates along with surcharge and cess. Budget 2026 Highlights: Here’s the List of What Gets Cheaper and What Costs More.

How Much Income Tax Will You Pay Under the New Regime?

Total Income Tax as per existing rates (Finance Act, 2024) Tax as per proposed rates Benefit of Rate/Slab Rebate Benefit Total Benefit Tax Payable (New Regime)
INR 8 lakh INR 30,000 INR 20,000 INR 10,000 INR 20,000 INR 30,000 INR 0
INR 9 lakh INR 40,000 INR 30,000 INR 10,000 INR 30,000 INR 40,000 INR 0
INR 10 lakh INR 50,000 INR 40,000 INR 10,000 INR 40,000 INR 50,000 INR 0
INR 11 lakh INR 65,000 INR 50,000 INR 15,000 INR 50,000 INR 65,000 INR 0
INR 12 lakh INR 80,000 INR 60,000 INR 20,000 INR 60,000 INR 80,000 INR 0
INR 13 lakh INR 1,00,000 INR 75,000 INR 25,000 INR 0 INR 25,000 INR 75,000
INR 15 lakh INR 1,40,000 INR 1,05,000 INR 35,000 INR 0 INR 35,000 INR 1,05,000
INR 20 lakh INR 2,90,000 INR 2,00,000 INR 90,000 INR 0 INR 90,000 INR 2,00,000
INR 25 lakh INR 4,40,000 INR 3,30,000 INR 1,10,000 INR 0 INR 1,10,000 INR 3,30,000
INR 50 lakh INR 11,90,000 INR 10,80,000 INR 1,10,000 INR 0 INR 1,10,000 INR 10,80,000

By keeping the Section 87A rebate unchanged at INR 60,000 for incomes up to INR 12 lakh, Budget 2026 maintains continuity rather than offering fresh middle-class tax relief. While the rebate continues to eliminate tax liability for many salaried taxpayers under the new regime, the lack of enhancement signals limited immediate support for boosting household consumption, with the government choosing fiscal stability over expanded personal tax concessions.

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(The above story first appeared on LatestLY on Feb 01, 2026 03:29 PM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).