Facing Intimation Orders with Demands for AY 2024-25

The Income Tax Department is closely reviewing ITRs for discrepancies like excess deductions, mismatched income details, or incorrect claims. With the 87A rebate removed for special rate incomes in the New Regime, many taxpayers face higher tax demands, as switching to the Old Regime in revised returns isn’t allowed. Accurate filing is now more crucial than ever.

The case of **Beena Manishbhai Fofaria vs. CIT (Appeals)** revolves around the application of **Section 87A** of the Income Tax Act, especially after the amendments brought by the Finance Act, 2023. 

In this case, the taxpayer filed her return for the Financial Year 2023-24, declaring a total income of Rs. 6,93,260, which included short-term capital gains (STCG) of Rs. 65,066. She claimed a rebate of Rs. 20,010 under Section 87A, as her total income was under Rs. 7,00,000. However, the Centralized Processing Centre (CPC) restricted the rebate to Rs. 10,250, disallowing the rebate on STCG. This led to a reduced refund amount, prompting the taxpayer to file an appeal.

The CIT (Appeals) ruled in favor of the taxpayer, stating that the Finance Act, 2023, permits a rebate on total income (excluding long-term capital gains taxed under Section 112A) if the total income is within Rs. 7,00,000. The ruling confirmed that short-term capital gains are eligible for the rebate if the total income is under Rs. 7,00,000.

This case is significant as it clarifies the application of Section 87A and benefits many taxpayers.