Sections 155 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Three short sections in Chapter IX carry distinct rules. Section 155 explains how rebates and reliefs are taken from the tax computed on total income. Section 158 deals with income accruing in a retirement benefit account kept in a notified country. Section 160 gives relief against Indian tax for tax paid in a country with which India has no agreement under section 159. This article reads them as per the Income-tax Act, 2025 (30 of 2025) as amended by the Finance Act, 2026.
Section 155 allows the deductions of section 156 from income-tax computed before those deductions, and caps them at that tax. Section 158 leaves the taxation of income in a specified account in a notified country to be prescribed. Section 160 gives a resident a deduction from Indian tax on doubly taxed foreign income at the lower of the Indian rate and the foreign rate (or the Indian rate if the two are equal), if he proves the foreign tax was paid.
Where these sections sit
Chapter IX is "Rebates and reliefs". Part A (rebates and reliefs) starts with section 155, and Part B (double taxation relief) begins after section 158. The Act came into force on the 1st April, 2026 (section 1(3)), save as otherwise provided. Check later amendments, rules and notifications.
The sections around them are covered in their own posts: section 156 (rebate), section 157 (arrears relief) and section 159 (DTAA relief). Section 161 begins the next Chapter; see our post on transfer pricing. If you have foreign income and want the relief claimed correctly, our NRI tax filing team can help.
Section 155: rebate to be allowed in computing income-tax
Section 155(1)
In computing the income-tax on the total income of an assessee with which he is chargeable for any tax year, there are allowed from the income-tax (as computed before allowing the deductions under this Part), "subject to the provisions of section 156", the deductions specified in that section.
Two points follow from the words used:
- The deduction is made from the tax, not from income. It is taken after the tax on the total income has been worked out.
- The starting figure is the income-tax computed before allowing the deductions under Chapter IX. Whatever reliefs the Chapter gives are taken from that starting figure.
The section says the deduction is subject to section 156, and the amount and conditions are in that section. This article does not restate them; read our post on section 156.
Section 155(2)
The deduction under section 156 shall not, in any case, exceed the income-tax (as computed before allowing the deductions under this Part) on the total income of the assessee with which he is chargeable for any tax year. The effect is that the rebate can wipe out the tax but cannot create a negative figure or a refund of its own.
Section 158: retirement benefit account in a notified country
Section 158(1)
The income accrued to a specified person in a specified account is taxed "in such manner and in such tax year, as may be prescribed". The Act itself sets no rate, year or method here. The detail is left to the Income-tax Rules, 2026; see our rule-wise guides.
Section 158(2): the three terms
| Term | Meaning |
|---|---|
| "notified country" | a country as may be notified by the Central Government |
| "specified account" | an account maintained in a notified country by the specified person for his retirement benefits, the income from which is taxed by that notified country at the time of withdrawal or redemption and not on an accrual basis |
| "specified person" | a person resident in India having opened a specified account in a notified country while being non-resident in India and resident in that country |
What has been notified is not in the text consulted, so this article names no country. The reader should check the notifications for the list.
Section 160: relief where no agreement exists
Section 160(1): residents
If a person who is resident in India in a tax year proves that, in respect of his income which accrued or arose during that tax year outside India (and which is not deemed to accrue or arise in India), he has paid income-tax, by deduction or otherwise, under the law of a country with which there is no agreement under section 159 for relief or avoidance of double taxation, he is entitled to a deduction from the Indian income-tax payable by him. The deduction is a sum calculated on that doubly taxed income:
- (a) at the Indian rate of tax or the rate of tax of the said country, whichever is the lower; or
- (b) at the Indian rate of tax if both the rates are equal.
Section 160(2): non-residents sharing in a firm
A non-resident person assessed on his share in the income of a registered firm assessed as resident in India, where that share includes income accruing or arising outside India in a country with which there is no agreement under section 159, and who proves that he has paid income-tax by deduction or otherwise under that country's law on the income so included, gets a deduction from the Indian income-tax payable by him. The calculation is the same: the lower of the two rates, or the Indian rate if they are equal.
Section 160(3): the four definitions
| Term | Meaning |
|---|---|
| "income-tax" in relation to any country | includes any excess profits tax or business profits tax charged on the profits by the Government of any part of that country or a local authority in that country |
| "Indian income-tax" | income-tax charged as per this Act |
| "Indian rate of tax" | the rate determined by dividing Indian income-tax, after deduction of any relief due under the provisions of this Act but before deduction of any relief due under this Part, by the total income |
| "rate of tax of the said country" | income-tax and super-tax actually paid in the said country as per its corresponding laws, after deduction of all relief due but before deduction of any relief due in the said country in respect of double taxation, divided by the whole amount of the income as assessed in the said country |
The condition that the person "proves" the payment is the trigger. The section does not say how the proof is to be shown; what the rules or forms ask for is left to the rules and is not in the text consulted.
A worked example
All numbers are invented to show the method in section 160(3).
Rohan Menon, resident in India, has a total income of Rs. 20,00,000 for the tax year, including Rs. 8,00,000 earned in a country with which there is no agreement under section 159. His Indian income-tax, after relief under the Act but before relief under this Part, is Rs. 4,00,000. In the other country he paid income-tax of Rs. 1,20,000 on that Rs. 8,00,000, with no further foreign relief.
- Indian rate of tax = Rs. 4,00,000 / Rs. 20,00,000 = 20%.
- Rate of tax of the said country = Rs. 1,20,000 / Rs. 8,00,000 = 15%.
- The lower rate is 15%. The deduction from Indian tax is 15% x Rs. 8,00,000 = Rs. 1,20,000.
If the foreign tax had been Rs. 2,00,000 on the same Rs. 8,00,000, the foreign rate would be 25%, higher than the Indian rate, and the deduction would be 20% x Rs. 8,00,000 = Rs. 1,60,000, not the full Rs. 2,00,000 paid.
Need help with foreign tax relief?
Claiming relief for foreign tax depends on proving payment, working out both rates and knowing whether an agreement exists under section 159. Our NRI tax filing service can prepare the computation and the supporting file with you.
Key takeaways
- Section 155 makes the section 156 deduction a reduction of tax, not of income, taken from the tax computed before the Chapter's deductions and never more than that tax.
- Section 158 sends the taxation of a notified-country retirement account to the prescribed rules.
- Section 160 relief is the lower of the Indian rate and the foreign rate, applied to the doubly taxed income, or the Indian rate if equal.
- Relief under section 160 applies where there is no agreement under section 159, and the person must prove payment of foreign tax.
- A non-resident sharing in a resident registered firm's income can claim the same relief under section 160(2).
Read next
- Section 156: rebate for resident individuals
- Section 157: relief when salary is paid in arrears or in advance
- Section 159: relief under agreements with other countries
- Sections 151 and 152: deductions for royalty income of authors and royalty on patents
- Section 162: meaning of associated enterprise
Disclaimer: Based on the Income-tax Act, 2025 (30 of 2025) as amended by the Finance Act, 2026, as consulted on 2 October 2026. It explains the words of the Act only; the Income-tax Rules, 2026, notifications, circulars, later amendments and the way the tax authorities and courts apply these provisions should be checked. This article is general information, not legal advice; check the official text before acting.