ITR Filing season is going on and Rebate under Section 87A is currently becoming a big topic here because some taxpayers are facing issues on claiming this rebate.
Reetu | Jul 17, 2024 |
ITR utility giving benefit of Section 87A Rebate on Income above Rs. 7 Lakhs: Know More
Income Tax Return (ITR) Filing season is going on and rebate under Section 87A is currently becoming a big topic these days. The issue is that on 5th July, the ITR online utility was updated, and after the update the utility stopped giving the benefit of Section 87A rebate for STCG u/s 111A and other special rate income. Before 5th July, IT Utility and Calculator were allowing 87A rebate against STCG u/s 111A and other special rate incomes other than Long Term Capital Gain (LTCG) u/s 112A where such rebate is specifically barred by Section 112A itself.
Interpretation followed by Income Tax Portal
It was provided that where the total income of the assessee chargeable to tax under sub-section (1A) of section 115BAC, does not exceed Rs. 700,000, the assessee shall be entitled to a rebate, of an amount equal to 100% of such income-tax or Rs. 25000, whichever is less.
This would mean that in case the assessee has opted for the New Tax Regime, then the rebate shall be available only on those income which are chargeable to tax u/s 115BAC. Special Income Chargeable to tax under other sections like Short Term Capital Gain (STCG) u/s 111A, 115BBH, etc. will not get the benefit of Rebate.
A new issue has been noticed in this regard. In some of cases, ITR Utility is providing the benefit of the rebate in the New Tax Regime, even if the total Income is more than Rs. 700,000.
Let’s understand this ongoing issue with an example:
Salary – 6.99 Lacs
STCG u/s 111A – 4 Lacs
Total Income – 10.99 Lacs
Income Tax utility is providing a Rebate of Rs. 24900 u/s 87A even for the above total income of 10.99 lacs, post 5th July update.
Portal Logic:-
Total Income @ Special rate 15% – 4 Lacs
Total Income taxable at Slab rate u/s 115BAC – 6.99 Lacs
(Since Income Taxable u/s 115BAC is less than 7 Lacs, Portal is giving Section 87A Rebate)
It’s High time that Tax Professionals get a clarification from the Income Tax Department on this issue to resolve future litigations.
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