Recent change in ITR utility for rebate u/s 87A has caused confusion and concerns among taxpayers and professionals.
Last date to file ITR for FY 2023-24 is 31st July 2024. But recently there has been a drastic change in income tax portal.
You can see the date of release of latest version of utility has been recently updated.
The change was computation of tax liability has been modified, and the maximum declaration for the Section 87A rebate removed.
For this, first we need to understand the Rebate u/s 87A in old tax regime and new tax regime.
In Old Regime, maximum:
- rebate is 12500
- income rebate is upto 5,00,000
In New Regime, maximum:
- rebate is 25000
- income rebate is upto 7,00,000
But on 5th July 2024, the Income Tax Department updated the ITR utility which has impact those with special rate incomes such as:
- Short-term capital gains (STCG) on shares under Section 111A
- Long-term capital gains (LTCG)
- Lottery winnings
- Income from gaming
Before 5th July 2024
The ITR utility and tax calculator allowed the Section 87A rebate for STCG u/s 111A and other special rate incomes. Only the rebate was not available for LTCG under Section 112A, as this was restricted.
Post 5th July 2024
The updated utility no longer provides rebate u/s 87A for special rate incomes, including STCG under Section 111A.
For Example
If an individual income is Rs. 7 lakh without any special rate income, then they will be eligible for the ₹25,000 rebate u/s 87A.
If an individual income is Rs. 7 lakh, including Rs. 1.5 lakh as STCG u/s 111A, then due to the recent changes, the individual is not eligible for the rebate on the special rate income portion.
Let us understand this in detail :
| Particulars | Upto 5th July 2024 | After 5th July 2024 |
| Income | 5,50,000 | 5,50,000 |
| Short Term Capital Gain | 1,50,000 | 1,50,000 |
| Tax on Income calculated u/s 115BAC | 12,500 | 12,500 |
| Tax on STCG (15%) | 22,500 | 22,500 |
| Total Tax Before Rebate | 35,000 | 35,000 |
| Rebate u/s 87A | 25,000 | - |
| Net Tax Payable | 10,000 | 35,000 |
Since after 5th July the rebate does not apply to the special rate income which leads to higher tax liability.
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