115BAC RESIDNT INDIVISUAL TOTAL INCOME UPTO 700000 FOR A.Y 25-26

[Fahiyaz Ahmmed]

• Has the CBDT issued any specific clarification or circular for AY 2025-26 on the quantum of rebate u/s 87A under Section 115BAC?

• Should the rebate be interpreted strictly as 100% of tax payable (Rs. 20,000) in this case, subject to the ceiling of Rs. 25,000?

• For examination and practical purposes, is it correct to conclude that tax becomes NIL due to the rebate of Rs. 20,000, not Rs. 25,000?

• LIKE UPTO 300000- NIL FOR A.Y 25-26

• 300000 - 700000= 400000*5%= 20000

[Ryan Vaz]

For AY 2025-26, if an individual's total income is Rs. 7,00,000 and they opt for (or default to) the new tax regime under Section 115BAC, the income tax payable before cess will be Rs. 20,000. The rebate under Section 87A will be Rs. 20,000 (being 100% of the tax payable, subject to the maximum limit of Rs. 25,000), resulting in a NIL net tax liability before health and education cess.

AI Summary

Section 87A rebate under the new tax regime can fully offset tax payable, leaving nil net liability before cess. Under the new tax regime, an individual resident with total income up to the specified threshold may receive a rebate under Section 87A that covers the full tax payable, subject to the statutory ceiling, reducing the net tax liability to nil before health and education cess.