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CMA Intermediate · Direct and Indirect Taxation · Deductions, Rebate and Relief

Arjun Nair, a resident individual, has total income of Rs 5,10,000 and income-tax before any deduction of Rs 22,500 (ignore cess). He is not taxed under section 202(1). What is the effect of section 156(1) of the Income-tax Act, 2025 on his tax?

No deduction is allowed and tax remains Rs 22,500. Section 156(1) is available only when total income does not exceed Rs 5,00,000, and Arjun's Rs 5,10,000 crosses that limit, so the Rs 12,500 deduction cannot be claimed.

  1. ADeduction of Rs 12,500, leaving Rs 10,000
  2. BNo deduction, because total income exceeds Rs 5,00,000, so tax remains Rs 22,500Correct
  3. CDeduction of Rs 22,500, leaving nil
  4. DDeduction of Rs 10,000, leaving Rs 12,500

Explanation

Section 156(1) applies only where total income does not exceed Rs 5,00,000. Arjun's total income of Rs 5,10,000 exceeds this limit, so no deduction is available under this sub-section. The tax of Rs 22,500 stays unchanged. Giving Rs 12,500 ignores the income ceiling.

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