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Section 155 Income Tax Act 2025: How Is Income-tax Rebate Calculated?

Section 155 lays down the general rule for allowing a rebate from income-tax. It operates with Section 156, which specifies the rebate available to eligible resident individuals.

Legal position: Section 155 forms part of Chapter IX, Part A (Rebates and reliefs), of the Income-tax Act, 2025, effective from 1 April 2026. It corresponds broadly to Section 87 of the Income-tax Act, 1961. It should not be confused with Section 155 of the 1961 Act, which concerns other amendments.

What does Section 155 provide?

Section 155 governs the stage at which a qualifying rebate is deducted from income-tax computed on total income. It does not itself set an independent monetary rebate or an income eligibility threshold. Those conditions are prescribed under Section 156.

Explanation of Section 155(1) and 155(2)

Section 155(1): Rebate from computed income-tax

In computing the tax chargeable on an assessee's total income for a tax year, the rebate specified in Section 156 is deducted from the income-tax computed before allowing the rebate under this Part, subject to the requirements of Section 156.

Section 155(2): Rebate cannot exceed income-tax

The amount allowed under Section 156 cannot exceed the income-tax on the assessee's total income as computed before allowing that rebate. Accordingly, Section 155 does not create a refundable excess merely because a nominal rebate ceiling is higher than the computed income-tax.

Important distinction: A rebate reduces income-tax payable, whereas a deduction from income reduces the amount of taxable income. Section 155 concerns a rebate from tax, not a deduction from gross total income.

Relevant statutory concepts

Assessee: The person whose income-tax liability is being computed; the statutory meaning is governed by the definition provisions of the Act.
Tax year: The period for which income is chargeable to tax under the Income-tax Act, 2025.
Total income: Income determined under the Act after applicable computations, exclusions and deductions, on which income-tax is calculated.
Rebate: A reduction of calculated income-tax, allowed only when the conditions in the applicable rebate provision are met.
Resident individual: An individual who satisfies the statutory residence rules for the relevant tax year. Residence and eligibility matter because Section 156 sets the qualifying conditions for the individual rebate.

How is a rebate applied in practice?

  1. Determine total income under the Act.
  2. Calculate income-tax under the applicable provisions and tax regime.
  3. Check whether the assessee meets Section 156 eligibility conditions, including any limits or exclusions.
  4. Calculate the rebate permitted under Section 156.
  5. Under Section 155(2), restrict the rebate to the amount of income-tax computed before the rebate.
  6. Apply any further statutory rules for calculating the final tax liability.

Illustration of the statutory cap

Assume an otherwise eligible taxpayer has income-tax of Rs. 8,000 before rebate and the rebate calculated under Section 156 would otherwise be Rs. 12,500. Section 155(2) limits the allowable rebate to Rs. 8,000. This example illustrates the cap only; actual eligibility and rebate computation must be checked under Section 156.

Corresponding provision under the 1961 Act

Section 155 of the Income-tax Act, 2025 corresponds to Section 87 of the Income-tax Act, 1961, which also established the general framework for a rebate from income-tax. The individual rebate provisions formerly found in Section 87A are addressed under Section 156 of the 2025 Act. Section numbering alone should never be used to equate Section 155 of the two Acts.

Frequently asked questions

Does Section 155 provide a fixed rebate amount?

No. Section 155 provides the framework and maximum-tax cap. The amount and eligibility rules are set out in Section 156.

Can a rebate exceed the income-tax calculated?

No. Section 155(2) expressly limits the rebate under Section 156 to the income-tax computed before allowing the rebate.

Is the rebate the same as an income-tax deduction?

No. A deduction generally reduces income before calculating tax. A rebate reduces the income-tax calculated on total income.

Is Section 155 of the 2025 Act the same as Section 155 of the 1961 Act?

No. Section 155 of the 2025 Act corresponds to Section 87 of the 1961 Act. Section 155 of the 1961 Act deals with a different subject.

Official statutory references

Official Section 155 textIncome-tax Act 2025 (official PDF)Income Tax Department guidance

Last reviewed: 10 November 2026. This article is for general legal information; the applicable statutory text and tax-year rules govern individual cases.