Income tax rebate under Section 87A: How much you can save in 2026

Find out how the income tax rebate under Section 87A can lower your tax liability in 2026, and how Bajaj Finserv Home Loan supports smarter financial planning.

Every year, as the tax filing season approaches, many salaried and self-employed individuals feel the same concern. Living costs have risen, and tax liability adds to that pressure. For many households, finding legal ways to reduce the tax outgo is a real and practical need.

The income tax rebate under Section 87A has attracted growing interest in 2026. Both salaried professionals and self-employed individuals are asking whether they qualify and how much they can actually save. This rebate, when used well, can reduce tax liability significantly or even bring it to zero.

Property owners and investors have additional concerns. Many want clear guidance on income tax on rental income and how to structure deductions correctly. Without proper planning, taxable income can be higher than it needs to be.

A well-chosen home loan can play a useful role here. It supports property ownership and also creates access to tax deductions under Sections 80C and 24B. Bajaj Finserv Home Loan offers competitive interest rates, manageable EMIs, and a long repayment tenure, making it a practical option for those planning their finances in 2026.

What is the income tax rebate under Section 87A

Who can claim the rebate in 2026

Section 87A offers a direct rebate on income tax payable. It applies to resident individuals only. Firms, HUFs, and non-resident individuals do not qualify. Senior citizens under the old tax regime may also be eligible, provided their taxable income falls within the prescribed limit.

The income threshold differs depending on the tax regime chosen. Under the old regime, taxable income must not exceed Rs. 5,00,000 after all applicable deductions. Under the new regime, the limit is Rs. 12,00,000. Choosing the right regime is important for maximising the rebate benefit.

How much tax can you save

The maximum rebate under the old regime is Rs. 12,500. Under the new regime, the maximum rebate has been increased to Rs. 60,000. This means that taxpayers with a taxable income of up to Rs. 12,00,000 under the new regime may pay zero income tax before the Health and Education Cess is applied.

Many taxpayers pay more tax than necessary. They do not fully understand how Section 87A works or how to apply it correctly. With the right information and planning, the income tax rebate can reduce total tax liability in a meaningful way.

Understanding income tax on rental income in 2026
What counts as rental income
Rental income includes earnings from both residential and commercial properties. This amount forms part of the total taxable income of the property owner in a given financial year. All rental receipts must be declared under the head "income from house property".
A standard deduction of 30% of the net annual value is available on rental income. This deduction covers maintenance and repair costs without the need to submit individual bills or receipts. It provides a straightforward way to reduce the taxable portion of rental earnings.
Common deductions available on rental income

Rental income can increase a taxpayer's total tax liability if it is not planned correctly. Many property owners miss out on deductions they are legally entitled to. Proper structuring of deductions can reduce taxable income and lower the overall tax burden.

* Interest paid on a home loan: The interest portion of a home loan EMI is deductible under Section 24B. For a let-out     property, there is no upper cap on this deduction, which can significantly reduce income tax on rental income.

* Municipal tax payments: Municipal taxes paid by the owner during the financial year are deductible from the  gross     annual value. This directly reduces the base on which rental income tax is calculated.

* Standard deduction of 30%: This flat deduction applies to the net annual value and covers general property upkeep.     It is available without proof of actual expenses, making it simple to claim.

A well-planned home loan can support both property ownership and tax management at the same time. Bajaj Finserv Home Loan allows borrowers to own property while accessing tax deductions on both the principal and the interest components of their loan.

Why a home loan can support smarter tax planning

Tax benefits linked with home loans

Buying a home may appear to be a large financial step at first. However, the tax deductions available on a home loan reduce the net cost of ownership over time. With the right loan, home ownership becomes a financially sound decision.

* Section 80C - principal repayment: The principal amount repaid on a home loan qualifies for a deduction of up to Rs. 1.5 lakh per year. This is available under the old tax regime and reduces the total taxable             income of the borrower.

* Section 24B - interest repayment: Interest paid on a home loan is deductible up to Rs. 2 lakh per year for a self- occupied property. For a let-out property, the full interest amount may be claimed, which is             especially relevant when managing income tax on rental income.

* Rented and self-occupied properties: Tax benefits apply to both categories. The specific deduction limits vary, but both types of property owners can benefit from home loan-linked deductions.

Balancing EMIs and savings

Longer repayment tenures reduce the monthly EMI amount. This helps borrowers maintain their monthly cash flow while continuing to service the loan. It also allows for regular part-prepayments when surplus funds are available.

Bajaj Finserv Home Loan offers EMIs starting from Rs. 671 per lakh, which keeps monthly repayments within reach. The loan is available at interest rates starting from 7.25%* p.a., with a tenure of up to 32 years and a loan amount of up to Rs. 15 crore*.

Key Bajaj Finserv Home Loan benefits borrowers value

Borrowers want flexibility and faster approvals. Standard loan processes can feel slow and involve too much paperwork. Bajaj Finserv addresses this with a range of practical features.

* Loan applications are processed quickly, with approval possible within 48 hours* of submission or even sooner, in       some cases.

* Eligible borrowers can access additional funds over and above the existing loan amount through a top-up loan of         up to Rs. 1 crore*. These funds carry no restrictions on end use.

* Individual borrowers on a floating interest rate can repay the full loan or make part-prepayments without paying a       penalty.

* Borrowers can choose from 5,000 pre-approved projects, which can speed up the loan disbursement process.

* Borrowers can opt for interest rates linked to the repo rate. This may offer an advantage when market rates move       in a favourable direction.

* A doorstep document pick-up service reduces the need for multiple branch visits. Borrowers can complete most of       the process from home.

How a balance transfer can help reduce costs

Transferring a high-interest home loan to Bajaj Finserv at a lower rate can reduce the total interest paid over the remaining tenure. Even a small reduction in the interest rate can result in notable savings over a 10 to 15-year period.

The balance transfer option also comes with access to the top-up loan facility. This means borrowers get a better interest rate and additional funds in a single process.

Eligibility criteria and documents required

How to apply for a Bajaj Finserv Home Loan
Many buyers delay applying because they expect the process to be long. In practice, however, a prepared applicant can complete the Bajaj Finserv Home Loan application online within a few minutes.
* Click on the 'APPLY' button on the Bajaj Finserv Home Loan page.
* Enter your full name, mobile number, and employment type.
* Select the type of loan you wish to apply for.
* Generate and submit your OTP to verify your phone number.
* After OTP verification, enter your monthly income, required loan amount, and property         details.
* Enter your date of birth, PAN number, and any other details based on your occupation           type.
* Click on the 'SUBMIT' button to complete the application.
A Bajaj Finserv representative will contact you and guide you through the next steps.

The income tax rebate under Section 87A offers real relief for eligible taxpayers in 2026. Under the new tax regime, individuals with a taxable income of up to Rs. 12,00,000 may reduce their tax liability to zero. Under the old regime, the benefit applies to those with income up to Rs. 5,00,000. Both options reward careful planning.
For property owners, understanding income tax on rental income is equally important. Proper use of available deductions, including home loan interest under Section 24B, can reduce the taxable portion of rental earnings and improve overall financial efficiency.
Home ownership is both a personal milestone and a sound financial decision. A home loan from Bajaj Finserv can support both goals. With interest rates starting from 7.25%* p.a., EMIs from Rs. 671 per lakh*, and a tenure of up to 32 years, the loan is designed to be manageable over the long term.
Plan your taxes smarter in 2026 while moving closer to owning your home with Bajaj Finserv Home Loan. Visit the official Bajaj Finserv website to check your eligibility and apply today.