87A Rebate Tax On Gold Jewellery LTCG: Many people in the new tax regime think that if their income stays below ₹12 lakh, they pay no tax at all. That is not fully right. The Income Tax Department says a resident individual can get a rebate of up to ₹60,000 under Section 87A when the income chargeable to tax under section 115BAC(1A) is up to ₹12,00,000. The official wording also says, “Rebate shall be limited to tax payable or Rs. 60,000, whichever is less”.
The rebate basically, helps with tax on normal slab income. It does not act like a magic eraser for every kind of income. The department’s own rules tie this rebate to income chargeable under section 115BAC(1A), which is the new tax regime part. That is the key reason people get confused when capital gains are mixed in with salary, pension, or interest income.
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Why Gold Jewellery Gains are Treated Differently
The tax department says capital gains are a separate head of income. It also says profits from transfer of a capital asset are taxable in the year of transfer. In the current tax tables, long-term capital gains in some cases are taxed at 12.5%, while section 112A gains are treated separately. So, by the way the law is written, the Section 87A rebate does not cancel tax on LTCG from old gold jewellery. That part stays taxable on its own.
The ₹1.25 lakh relief people often talk about is linked to special equity-type capital gains under section 112A. It is not the same thing as gains from selling old gold jewellery. So the gold jewellery gain does not get that benefit. This is the important split: normal income on one side, special-rate capital gains on the other.
What this Means?
In the example, the normal income is ₹5.70 lakh from pension and bank interest. That part sits in the slab-tax basket. If the pension is taxed under salary rules, the Income Tax Department says standard deduction is allowed, and under the new regime the note on pension income mentions a higher standard deduction of ₹75,000. So the exact taxable figure can change a little depending on the type of pension income.
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The LTCG of ₹6.10 lakh from old gold jewellery is different. The Section 87A rebate can reduce tax on the normal income part, but it cannot be used against the special-rate LTCG tax. So the person can get rebate on the tax from the ₹5.70 lakh normal income, while the tax on the gold gain still has to be paid separately. The official rule says the rebate is for income tax on total income under section 115BAC(1A), and it is limited to the tax payable.
Accordingly, your final tax liability works out to ₹79,300, including cess.
| Particular | Amount (₹) | Rate | Tax Payable (₹) |
|---|---|---|---|
| Tax on Normal Income | |||
| Normal Income | 5,70,000 | ||
| Basic Exemption Limit | 4,00,000 | 0% | – |
| Balance | 1,70,000 | 5% | 8,500 |
| Less: Rebate u/s 87A | – | – | (8,500) |
| Tax Payable on Normal Income | – | – | – |
| Tax on Special Income | |||
| LTCG | 6,10,000 | 12.5% | 76,250 |
| Total Tax Payable | – | – | 76,250 |
| Cess @ 4% | – | – | 3,050 |
| Total Tax including Cess | – | – | 79,300 |
