Section 156 — Rebate of income-tax in case of certain individuals. Successor to s.87A of the 1961 Act.
Section 156 is in Chapter IX — Rebates and Reliefs, which runs from section 155 to section 160.
Sub-section (1) gives an individual resident in India a deduction of 100% of the income-tax payable or Rs 12,500, whichever is less, from the income-tax chargeable on total income for a tax year computed before this deduction, if the total income does not exceed Rs 5,00,000.
Sub-section (2) gives a separate deduction where a resident individual's total income is chargeable under section 202(1). Clause (a) allows, where the income does not exceed twelve lakh rupees, 100% of the income-tax payable or Rs 60,000, whichever is less. Clause (b) allows, where the total income exceeds twelve lakh rupees and the income-tax payable exceeds the amount by which the total income is in excess of twelve lakh rupees, an amount equal to that excess of tax over that excess of income.
Sub-section (3) caps the sub-section (2) deduction at the income-tax payable as per the rates provided in section 202(1).
The section removes tax at the bottom of the scale without moving the rate slabs, by wiping out the computed tax up to a stated income. Clause (b) then prevents the cliff a flat cut-off would create, where an individual just above twelve lakh rupees would pay far more additional tax than the additional income earned. Sub-section (3) confines the relief to tax computed at the section 202(1) rates.
| What | Figure | The condition on it | Where |
|---|---|---|---|
| Deduction under the first limb | 100% of income-tax payable or Rs 12,500, whichever is less | Individual resident in India whose total income for the tax year does not exceed Rs 5,00,000 | Sub-section (1) |
| Deduction where income is chargeable under section 202(1) | 100% of income-tax payable or Rs 60,000, whichever is less | Where the income does not exceed twelve lakh rupees | Sub-section (2)(a) |
| Marginal relief above twelve lakh rupees | The amount by which the income-tax payable exceeds the amount by which the total income exceeds twelve lakh rupees | Available only where the tax payable exceeds that excess | Sub-section (2)(b) |
| Cap on the sub-section (2) deduction | The income-tax payable as per the rates provided in section 202(1) | The deduction cannot exceed that amount | Sub-section (3) |
There are two independent rebates answering to different conditions: sub-section (1) is tied to total income not exceeding Rs 5,00,000 and is worth at most Rs 12,500, while sub-section (2) applies to income chargeable under section 202(1) and is worth at most Rs 60,000 at twelve lakh rupees. Neither is a fixed subtraction — each is the lower of the stated amount and the tax actually payable. Above twelve lakh rupees the relief does not stop dead: clause (b) hands back only the tax in excess of the amount by which income crosses twelve lakh. Section 198(7) then confines the rebate to tax on income remaining after the long-term capital gains taxed under that section.
A resident individual taxed under section 202(1) has total income of Rs 12,10,000. At the section 202(1) Table rates the tax is Rs 61,500 — nil on the first Rs 4,00,000, Rs 20,000 at 5%, Rs 40,000 at 10% and Rs 1,500 on the last Rs 10,000 at 15%. Clause (a) is unavailable, but the tax exceeds the Rs 10,000 by which income crosses twelve lakh, so clause (b) allows Rs 51,500 and leaves Rs 10,000 payable. At exactly Rs 12,00,000 the tax of Rs 60,000 would have been wiped out by clause (a).
In the tax computation of an individual's return, applied against the income-tax before surcharge and cess are worked out on the balance. It is why a resident individual at or below twelve lakh rupees under section 202(1) pays no income-tax, and it appears again in section 198(7).
the income does not exceed twelve lakh rupees, 100% of the income-tax payable or Rs. 60000, whichever is less
See the full 1961 to 2025 concordance.
All of them are in the Rules 2026 index.
See the circulars index.
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