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

Sunita, a resident individual, has total income of Rs. 5,00,001, taxed under the regime that offers only the section 156(1) rebate, with income-tax before rebate of Rs. 12,500.20. Which statement follows from section 156(1)?

She gets no rebate under section 156(1). The sub-section requires total income not exceeding Rs. 5,00,000, and Rs. 5,00,001 breaches this condition. The provision has no marginal relief, so the full tax remains payable.

  1. AShe gets a rebate of Rs. 12,500 as income is near the limit
  2. BShe gets a rebate of the excess of tax over Rs. 1
  3. CShe gets no rebate under section 156(1) because total income exceeds Rs. 5,00,000Correct
  4. DShe gets a rebate of 50% of the tax

Explanation

Section 156(1) applies only if total income does not exceed Rs. 5,00,000. Rs. 5,00,001 exceeds this limit by Re. 1, so no rebate is allowed under that sub-section. There is no marginal relief in sub-section (1). Sub-section (2)(b) works only for income above twelve lakh rupees under section 202(1).

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