Section 87A Rebate Can be Claimed on Both LTCG and STCG for up to AY 2024-25: ITAT

The Income Tax Appellate Tribunal (ITAT), in one of its rulings, has held that the rebate under Section 87A can be claimed on long-term capital gains (LTCG) for up to AY 2024-25, giving major relief to taxpayers.

The applicant, Venkatraman, is a Tamil Nadu resident. He filed his Income Tax return (ITR) for AY 2024-25 under the new tax regime, declaring the total income of Rs 4.97 lakh, including the long-term capital gain. He claimed the rebate under section 87A at Rs 12,500. However, the Centralised Processing Centre (CPC) of the income tax department rejected the claim, holding that LTCG is taxed at special rates. Even his first appeal was also rejected. Therefore, he approached the ITAT Chennai.

The ITAT Chennai observed that in Budget 2025, the government had notified that from April 1, 2025, the rebate under section 87A will not be applicable to the income taxed at special rates, including the Long-Term Capital Gain (LTCG) and Short-Term Capital Gain (STCG). However, this law does not apply for up to Assessment year up to 2024-25. Which means that the 87A rebate can be claimed on LTCG and STCG for up to AY 2024-25.

Therefore, the ITAT Chennai allowed the rebate, holding that the amendment is effective from AY 2025-26 and not before that. For AY 2024-25, the law does not restrict the rebate for LTCG.