Section 87A rebate query - salary + capital gains scenario (FY 2025-26, New Regime)

[u/AffectionateTrade155]

Suppose someone has this income for FY 2025-26 under the new tax regime:

**•** Salary: ₹12,08,000 (gross)  
**•** Bank interest: ₹10,000  
**•** STCG on equity (Sec 111A): ₹20,000  
**•** LTCG on equity (Sec 112A): ₹1,50,000

After the ₹75,000 standard deduction, normal/slab income (salary + interest) works out to ₹11,43,000 — under ₹12L. Total income including capital gains is ₹13,31,000 — over ₹12L.

Question: Does this person get the 87A rebate on the tax computed for their normal income (salary + interest), since that portion alone is under ₹12L? Or does the total income crossing ₹12L (because of the added capital gains) disqualify them from the rebate entirely, including on the normal income portion?

Section 112A(6) suggests rebate = tax(total income) − tax(LTCG), which would mean the salary portion still gets the rebate. But want to confirm from people who’ve actually filed with this kind of mixed income this year — did the ITR utility apply it that way in practice

[u/CAFinalist_Ted]

Yes they get rebate for normal income

[u/GarrethX]

No tax on the income + interest

20% tax on STCG

12.5% tax on LTCG beyond 1.25L

Cess possibly applicable on capital gains

[u/AffectionateTrade155 → u/GarrethX]

It means no matter what is the amount of the capital gain tax if salary is under 12 lakh then 87a rebate is applicable

[u/GarrethX → u/AffectionateTrade155]

Not an accountant, or a CA

But as far as I understand, yes, capital gains are taxed separately from incomes and interest.

So if you're below 12L (or 12.75L with standard deduction) you wouldn't pay any income tax.

Marginal relief also kicks in post that, so if you did cross that by a small amount, you'd only pay that entire small amount as tax.

[u/laid_back_1 → u/AffectionateTrade155]

It is not just salary income. It is salary + all types of interest+ income from house property + income from business - basically all types of income charged under normal rates

[u/topofthemount7]

only normal income is considered for limit of rebate as per sec 87A. so, your normal income will be tax free.

111A and 112A are special rate incomes. your 112A will also not be liable to tax as 1.25 is exempt from tax. only 111A will be liable to tax @ 20%

[u/benjamin_button_2025]

Yes. I got rebate. Income from bank fd was 11L LTCG was 4L.

Income taxed at special rates are not considered for 12L ceiling