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

Kavita Rao, a resident individual, has total income of Rs 11,80,000 chargeable to tax under section 202(1) of the Income-tax Act, 2025. Her income-tax computed before the deduction is Rs 58,000 (ignore cess). What is her tax payable after the deduction under section 156(2)?

Her tax payable is nil. Under section 156(2)(a), where total income does not exceed Rs 12 lakh, the deduction is the lesser of the tax or Rs 60,000. The tax of Rs 58,000 is lower, so it is wholly deducted. The deduction cannot exceed the tax.

  1. ARs 58,000
  2. BRs 60,000
  3. CNilCorrect
  4. DRs 2,000

Explanation

Total income does not exceed Rs 12 lakh, so section 156(2)(a) allows 100% of tax payable or Rs 60,000, whichever is less. The lesser of Rs 58,000 and Rs 60,000 is Rs 58,000. Tax payable is 58,000 - 58,000 = nil. A deduction of Rs 60,000 would exceed the tax itself, which section 156(3) does not allow.

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