Income Tax Act 2025: Section 156 for Tax Year 2026-27

Rebate of income-tax in case of certain individuals

[Section-156 as per the Income Tax Act, 2025 (this Act) w.e.f. 1st April, 2026.]

Section 156(1) of Income Tax Act 2025

156(1) A resident individual assessee shall be entitled to a deduction of 100% of income-tax payable or twelve thousand five hundred rupees, whichever is less, from the income-tax (computed before allowing the deduction under this section) chargeable on the total income for any tax year if the total income does not exceed five lakh rupees.

Section 156(2) of Income Tax Act 2025

156(2) Where the total income of a resident individual assessee for any tax year is chargeable to tax under section 202(1), then from income-tax (computed before allowing the deduction under this section) following deductions shall be allowed, if—

• (a) the income does not exceed twelve lakh rupees, 100% of the income-tax payable or sixty thousand rupees, whichever is less;
• (b) the income exceeds twelve lakh rupees, the income-tax payable on the total income, reduced by total income which is in excess of twelve lakh rupees.

Section 156(3) of Income Tax Act 2025

156(3) The deduction under sub-section (2), shall not exceed income-tax payable as per the rates provided in section 202(1).

FAQs on Section 156 of Income Tax Act 2025

Who is eligible for a rebate under Section 156(1) of the Income Tax Act, 2025?
A resident individual whose total income for the tax year does not exceed ₹5,00,000 is eligible.

What is the amount of rebate allowed under Section 156(1)?
The rebate is 100% of income-tax payable or ₹12,500, whichever is less.

Is the rebate under Section 156(1) available to HUFs or firms?
No, it is available only to individual resident assessees.

Is the rebate under Section 156(1) applicable before or after computing total income?
It is applied to the income-tax computed before allowing the deduction under this section.

What happens if the total income exceeds ₹5,00,000?
No rebate is available under Section 156(1) if total income exceeds ₹5,00,000.

What is Section 156(2) about?
It provides a rebate to individuals whose income is taxable under section 202(1), i.e., under a specified tax regime, and whose income does not exceed ₹12,00,000.

What is the rebate limit under Section 156(2)(a)?
If total income does not exceed ₹12,00,000, the rebate is 100% of tax payable or ₹60,000, whichever is less.

Is the rebate under Section 156(2)(a) available to all individuals?
No, only resident individuals taxed under section 202(1) are eligible.

What if the total income exceeds ₹12,00,000?
Then, the rebate is equal to the income-tax payable on the excess of total income over ₹12,00,000, subtracted from the total income-tax payable.

Can you explain Section 156(2)(b) with an example?
Yes. If total income is ₹13,00,000 and tax payable is ₹1,10,000, the excess over ₹12,00,000 is ₹1,00,000. The rebate allowed is ₹1,10,000 – ₹1,00,000 = ₹10,000.

Is there a cap on the rebate under Section 156(2)?
Yes, as per Section 156(3), the rebate under sub-section (2) shall not exceed the tax payable under the rates specified in section 202(1).

Can a non-resident individual claim this rebate?
No, the rebate is only available to resident individuals.

Are senior citizens treated differently under Section 156?
No special provision is made in Section 156 itself; it applies uniformly to all resident individuals.

Can the rebate be carried forward to future years if unused?
No, the rebate is not allowed to be carried forward. It is applicable for the relevant tax year only.

Is the rebate under Section 156 optional?
No, if the conditions are met, the rebate must be allowed as part of tax computation.

Is rebate under Section 156 applicable under both tax regimes?
No. Section 156(1) is not regime-specific, but Section 156(2) explicitly applies only if the taxpayer is chargeable under section 202(1).

Does the rebate under Section 156 reduce taxable income?
No, it reduces the tax payable, not the total income.

Is rebate available if income includes capital gains?
Yes, if total income and other conditions under Section 156 are satisfied, source of income is not a limiting factor.

Can the rebate be claimed through filing the return?
Yes, it is auto-applied when computing tax liability in the return if eligible.

Are there any documentation requirements to claim this rebate?
No separate documentation is required beyond normal income reporting in the return.