Section 156 Rebate: Eligibility and How to Claim#
Section 156 of the Income Tax Act, 2025 replaces Section 87A of the 1961 Act, effective from Tax Year 2026-27 (1 April 2026). The rebate itself is unchanged ā only the section number is new.
What is Section 156?#
A rebate that reduces a resident individual's tax liability to zero if their taxable income is below a set ceiling. Both tax regimes have this rebate, but with different ceilings and caps.
Eligibility#
- Resident individual (not available to HUFs, firms, companies, or non-resident individuals)
- New regime: taxable income up to ā¹12 lakh
- Old regime: taxable income up to ā¹5 lakh
Rebate Amount#
- New regime: the lower of the computed tax or ā¹60,000
- Old regime: the lower of the computed tax or ā¹12,500
Marginal Relief Near the ā¹12 Lakh Cliff (New Regime)#
If taxable income is slightly above ā¹12 lakh, the rebate itself no longer applies, but marginal relief caps the tax at the amount by which income exceeds ā¹12 lakh ā so a small increase in income can't create a tax bill larger than that increase. This applies up to roughly ā¹12.75 lakh taxable income; beyond that, tax is charged in full.
How It Works#
Example: ā¹11 Lakh Taxable Income (New Regime)#
- Tax on slabs (ā¹4Lā8L at 5%, ā¹8Lā11L at 10%) = ā¹50,000
- Taxable income is within the ā¹12 lakh ceiling ā rebate = ā¹50,000, the lower of the computed tax and the ā¹60,000 cap
- Net Tax = ā¹0
Example: ā¹6 Lakh Taxable Income (Old Regime)#
- Tax = ā¹17,500
- Taxable income (ā¹6 lakh) exceeds the old regime's ā¹5 lakh rebate ceiling ā no rebate applies
- Net Tax = ā¹17,500
Example: ā¹4.8 Lakh Taxable Income (Old Regime)#
- Tax = ā¹11,500
- Taxable income is within the ā¹5 lakh ceiling ā rebate = ā¹11,500 (below the ā¹12,500 cap)
- Net Tax = ā¹0
Important Points#
- Available under both regimes, but the new regime's ceiling (ā¹12 lakh) is far more generous than the old regime's (ā¹5 lakh)
- Works alongside other deductions under the old regime
- Senior and super senior citizens can claim it too ā there's no rule excluding them, though the old regime's higher basic exemption limit for seniors means they often owe less tax before the rebate is even applied
Conclusion#
The Section 156 rebate reduces tax to zero for eligible individuals, but the two regimes' ceilings are very different ā check which regime your taxable income actually qualifies under before assuming zero tax.