The Income Tax Department has recently announced an important update regarding the section 87A rebate.
As you might remember, the ITR utilities were updated in early July 2024 to disallow Section 87A rebate on incomes taxed at special rates – such as Short-Term Capital Gains (STCG) from listed shares and equity mutual funds.
Taxpayers who filed their returns before this change and claimed the rebate unknowingly received demand notices later.
These notices asked taxpayers to pay the differential tax liability due to the disallowance.
But now,
The ITD has notified that they will reinstate the rebate eligibility on special rate incomes. They will modify the ITR-2 and ITR-3 forms and release the updated utilities soon to accomodate these changes.
What does this mean for taxpayers?
Once the updated utilities are available:
Taxpayers can file a revised return and claim the rebate Get a refund of the excess tax paid
Extension of revised and belated ITR filing deadline
To ensure taxpayers have enough time to file revised returns and claim their refunds, the due date for filing revised and belated ITRs has been extended to 15th January 2025.
Hello @hirenbhut93 Yes, you can file a revised ITR and claim refund. Please note that ITD have not yet updated the ITR utilities but is expected to be updated soon.
Hi
Finally my itr 2 got processed after 8 months delay and i see that , i have not got 87A rebate on my income under special rate… I only got rebate on my normal income… So i ended up getting less refund from my tds. My over all income is just 5.2 lacs and i submitted itr in new regime… Had i used old regime , my income would be less tha 5 lac after 80 c deductions…
Is there anyway to get 87A rebate on the income under special rate…
My overall tax was just 12538… They refund only 9k … But took tax of 3k on my special income
The Income Tax Department extended the due date for filing returns after a Bombay High Court decision allowing the rebate for FY 2024-25, but they are still not granting it while processing returns. Since the due date has passed, you cannot switch your tax regime or file a revised return, but you can raise a grievance and also file a rectification request on the income tax portal under Section 154 to seek resolution.
Thank you for the response. Should i file a rectification or re process request… Should i be doing any changes file filing rectification/reprocess request.
Also should i wait for this month to pass , so that i can submit request to the AO.
Do i get any comments section to mention as to why im requesting to re process. As they have already mentioned that they dont consider special income for rebate, will they consider it while reprocess ing
No, under the “reprocess the return” they don’t give the option to add a comment or remark.
Based on the recent ruling, claiming a Section 87A rebate on STCG under 111A isn’t automatic for all taxpayers. The CIT(A) ruling supports the rebate, but it’s not a general rule. Unless the Income Tax Department issues new guidance or contests it, taxpayers facing disallowances may need to appeal individually.
Thank you Shreya for clearing my queries… One last doubt for time being, recently many are getting demand notice who availed the rebate. Why are they getting the demand notice …
Hi… The rectification request to reprocess has been completed, but the rebate is not given on my special income even after the CIT(A) direction to give rebate on special income too.
Taxpayers can file a revised return and claim the rebate