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How the rebate works
You compute tax on your total income at slab rates; if total income is within the limit, the rebate cancels that tax (up to the maximum). Cess is applied after the rebate, so a full rebate means zero cess too.
Marginal relief just above ₹12 lakh
In the new regime, if your income crosses ₹12 lakh slightly, the extra tax cannot exceed the extra income. Example: at ₹12,10,000 the slab tax is ₹61,500 but marginal relief limits it to ₹10,000.
Not on special-rate income
The rebate is not available against tax on special-rate income such as short-term gains on listed shares (20%) or long-term gains above ₹1.25 lakh (12.5%). A person with ₹10 lakh salary and ₹2 lakh STCG pays tax on the STCG even though total income is ₹12 lakh.
Worked example
Example: Taxable income ₹11,50,000 (new regime): slab tax ₹55,000 → rebate ₹55,000 → nil.
Common mistakes
- NRIs claiming the rebate
- Assuming capital-gains tax is covered by the rebate
- Forgetting marginal relief just above the limit
Frequently asked questions
Yes. Section 156 carries the same ₹60,000 rebate for taxable income up to ₹12 lakh in the new regime.
Last reviewed on 11 November 2026 by Vinay Jaglan, VJ & Associates. Law and portal screens change — verify before acting, or ask the office.
