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

Meera Iyer is a resident individual whose total income for the tax year is Rs 4,80,000. Her income-tax computed before any deduction under the rebate provision is Rs 11,000 (ignore cess). Under section 156(1) of the Income-tax Act, 2025, what is her tax payable after the deduction?

Her tax payable is nil. Section 156(1) allows a resident individual with total income up to Rs 5,00,000 a deduction of the lesser of 100% of the tax or Rs 12,500. The lesser amount is the whole Rs 11,000 of tax, so nothing remains payable.

  1. ANilCorrect
  2. BRs 11,000
  3. CRs 12,500
  4. DRs 5,500

Explanation

Section 156(1) gives a resident individual a deduction of 100% of the tax payable or Rs 12,500, whichever is less, if total income does not exceed Rs 5,00,000. Total income is Rs 4,80,000, so the test is met. The lesser of Rs 11,000 and Rs 12,500 is Rs 11,000, so tax payable is 11,000 - 11,000 = nil. Rs 11,000 as payable ignores the deduction altogether.

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