diff --git a/src/vs/editor/common/model/textModel.ts b/src/vs/editor/common/model/textModel.ts
index e7fef0ea146..13e766b5680 100644
--- a/src/vs/editor/common/model/textModel.ts
+++ b/src/vs/editor/common/model/textModel.ts
@@ -488,6 +488,15 @@ export class TextModel extends OrderGuaranteeEventEmitter implements editorCommo
 		return IndentRange.deepCloneArr(indentRanges);
 	}
 
+	private _toValidLineIndentGuide(lineNumber:number, indentGuide:number): number {
+		let lineIndentLevel = this._lines[lineNumber - 1].getIndentLevel();
+		if (lineIndentLevel === -1) {
+			return indentGuide;
+		}
+		let maxIndentGuide = Math.ceil(lineIndentLevel / this._options.tabSize);
+		return Math.min(maxIndentGuide, indentGuide);
+	}
+
 	public getLineIndentGuide(lineNumber:number): number {
 		if (lineNumber < 1 || lineNumber > this.getLineCount()) {
 			throw new Error('Illegal value ' + lineNumber + ' for `lineNumber`');
@@ -499,10 +508,10 @@ export class TextModel extends OrderGuaranteeEventEmitter implements editorCommo
 			let rng = indentRanges[i];
 
 			if (rng.startLineNumber === lineNumber) {
-				return Math.ceil(rng.indent / this._options.tabSize);
+				return this._toValidLineIndentGuide(lineNumber, Math.ceil(rng.indent / this._options.tabSize));
 			}
 			if (rng.startLineNumber < lineNumber && lineNumber <= rng.endLineNumber) {
-				return 1 + Math.floor(rng.indent / this._options.tabSize);
+				return this._toValidLineIndentGuide(lineNumber, 1 + Math.floor(rng.indent / this._options.tabSize));
 			}
 			if (rng.endLineNumber + 1 === lineNumber) {
 				let bestIndent = rng.indent;
@@ -513,7 +522,7 @@ export class TextModel extends OrderGuaranteeEventEmitter implements editorCommo
 						bestIndent = rng.indent;
 					}
 				}
-				return Math.ceil(bestIndent / this._options.tabSize);
+				return this._toValidLineIndentGuide(lineNumber, Math.ceil(bestIndent / this._options.tabSize));
 			}
 		}
 
diff --git a/src/vs/editor/test/common/model/textModel.test.ts b/src/vs/editor/test/common/model/textModel.test.ts
index b9ddc6462df..0dcfe908a42 100644
--- a/src/vs/editor/test/common/model/textModel.test.ts
+++ b/src/vs/editor/test/common/model/textModel.test.ts
@@ -721,4 +721,12 @@ suite('TextModel.getLineIndentGuide', () => {
 			[0, '}'],
 		]);
 	});
+
+	test('issue #12398 - Problem in indent guidelines', () => {
+		assertIndentGuides([
+			[2, '\t\t.bla'],
+			[3, '\t\t\tlabel(for)'],
+			[0, 'include script'],
+		]);
+	});
 });