IT department again allows section 87A rebate on special rate incomes | ITR deadline extended to Jan 15, 2025

Income Tax
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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.

Here’s a read on how the rebate calculation was affected: No tax rebate u/s 87A allowed on short term gains from stocks and equity MFs

What happened next?

  • 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:

:white_check_mark: Taxpayers can file a revised return and claim the rebate
:white_check_mark: 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.

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Can I get a refund if I have already paid the demand under the new tax regulations by filing a revised return for issue 87A?

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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.

Thanks

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How to claim refund for the demand already paid for u/s 87A? Do I need to input the challan details or anything like that in the revised return?

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Hey @knight

You have to add the details of demand paid in Schedule taxes paid under self assessment tax and file a revised ITR before January 15, 2025.

Hope it helps.

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