ITR filing 2025 query: Is Section 87A rebate ₹12,500, ₹25,000, or ₹60,000 for taxpayers?

₹12,500, ₹25,000 or ₹60,000? As the tax filing season intensifies, confusion is growing around the rebate under Section 87A of the Income Tax Act, 1961.

The rebate under this section enables small taxpayers to pay zero tax if their income chargeable to tax is not above ₹5 lakh in the old tax regime and up to ₹7 lakh in the new tax regime.

One big reason behind the growing confusion is an announcement in Budget 2025, which increased the amount of rebate under this section to up to ₹60,000. Many taxpayers believe they can claim this higher rebate while filing ITR in the current season. Well, they are wrong. Let's understand the reasons:

• First, the higher Section 87A rebate announced in Budget 2025 applies to your income in the Financial Year (FY) 2025-26, and it will come in handy when you file your ITR next year for Assessment Year 2026-27.

• Second, in the current ITR filing season 2025, you are filing returns for the income earned in FY 2024-25 (AY 2025-26), where the applicable rebate is the amount that was announced or approved in Budget 2024.

What's the rebate that you can claim in the current ITR season?

In the current ITR filing season, you can claim a rebate of up to ₹12,500 and even up to ₹25,000, depending on your choice of tax regime.

The following are the rules for Section 87A rebates under both regimes when filing ITR for FY 2024-25 in the current tax filing season:

The new regime also allows marginal tax relief if a person's total income is just a little above ₹7 lakh.

If the total taxable income in the new regime is over ₹7,00,000 and the tax payable on such income exceeds the difference between the total income and ₹7,00,000 then he can claim a rebate with marginal relief to the extent of the difference between the tax payable on such total income and the amount by which it exceeds ₹7,00,000.