CMA Intermediate · Direct and Indirect Taxation · Deductions, Rebate and Relief
Arun, a resident individual, has total income of Rs. 12,00,000, chargeable to tax under section 202(1), and income-tax on it before rebate is Rs. 60,000. Under section 156(2)(a), what is the rebate?
The rebate is Rs. 60,000. For a resident individual taxed under section 202(1) whose income does not exceed Rs. 12 lakh, section 156(2)(a) gives 100% of the tax or Rs. 60,000, whichever is less. Tax equals Rs. 60,000, so net tax is nil.
- ARs. 12,500
- BRs. 60,000Correct
- CRs. 30,000
- DNil, because income exceeds Rs. 5,00,000
Explanation
Under section 156(2)(a), where income does not exceed twelve lakh rupees, the rebate is 100% of the tax payable or Rs. 60,000, whichever is less. Tax is Rs. 60,000, so the rebate is Rs. 60,000 and the net tax is nil. Rs. 12,500 is the limit under sub-section (1), which applies at the lower income threshold.
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