Go Ad-Free on CAclubindia with Daily Mobile Updates. Subscribe Now!

ITR 2 calculating wrong rebate 87A

Karan (.) (65 Points)

06 July 2024

Salary Income - 5,53,501
STCG 111A - 11,371
LTCG 112A - 2,076
Other Sources - 79,753
New Regime
Rebate u/s 87A should be available on whole tax of Rs 15,869 but ITR 2 is only allowing it for tax on regular income.
I even checked income tax calculator on ITD website and same is calculating rebate correctly and showing 0 tax.

Am I missing something or is this an error in ITR Form?

The rebate can be claimed against tax liabilities on:

Normal income is taxed at the slab rate.
Long-term capital gains under Section 112 of the Income Tax Act (excluding listed equity shares and equity-oriented schemes of mutual funds).
Short-term capital gains on listed equity shares and equity-oriented schemes of mutual funds under Section 111A, taxed at a flat rate of 15%.

Reply
Follow
Share

22 Replies

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (177840 Points)
Replied 07 July 2024

In IT calculator you fill STCG & LTCG, while in actual it is LTCG u/s. 112A, which are taxable at SPECIAL RATE.

Now, the rebate is not available over the income which is taxable at special rate.

Upgrade to CAclubindia Pro. Subscribe Now!

Karan (.) (65 Points)
Replied 07 July 2024

Originally posted by : Dhirajlal Rambhia
	Thee is no error in utility. Only need to understand it properly.In IT calculator you fill STCG & LTCG, while in actual it is STCG u/s. 111A & LTCG u/s. 112A, which are taxable at SPECIAL RATE.Now, the rebate is not available over the income which is taxable at special rate.

IT calculator you fill STCG & LTCG, while in actual it is STCG u/s. 111A

Income tax calculator on ITD website allows you to enter STCG u/s 111A

rebate is not available over the income which is taxable at special rate

Rebate is indeed not available for 112A (LTCG equity) but rebate is available for 111A (STCG equity)
Here you can see in ITD website calculator that full rebate is allowed for both regular rate and special rate

111A(3) - Where the total income of an assessee includes any short-term capital gains referred to in sub-section (1), the rebate under section 88 shall be allowed from the income-tax on the total income as reduced by such capital gains.

However same thing in ITR shows rebate not available

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (177840 Points)
Replied 07 July 2024

That is what I mean to say. The calculator takes it at normal rate, not at special rate. That is the mistake in calculator, but not in ITR utility.

The mistake in calculator may be linked to an option, had your income below tax exemption limit, then you would have got the exemption over the CG up to the exemption limit.

Karan (.) (65 Points)
Replied 07 July 2024

Originally posted by : Dhirajlal Rambhia
	That is what I mean to say. The calculator takes it at normal rate, not at special rate. That is the mistake in calculator, but not in ITR utility.The mistake in calculator may be linked to an option, had your income below tax exemption limit, then you would have got the exemption over the CG up to the exemption limit.

Income is well below 7lakh
Tax is also below maximum rebate of 25,000

Even if we assume that calculator is wrong but is section 111A also wrong?
Why does 111A say that rebate is available when it is not available?

111A(3) - Where the total income of an assessee includes any short-term capital gains referred to in sub-section (1), the rebate under section 88 shall be allowed from the income-tax on the total income as reduced by such capital gains.

Rebate against various tax liabilities
Section 87A rebate can be claimed against tax liabilities on:
1. Normal income which is taxed at the slab rate
2. Long-term capital gains under Section 112 of the Income Tax Act. (Section 112 applies for long-term capital gains on the sale of any capital assets other than listed equity shares as well as equity-oriented schemes of mutual funds)
3. Short-term capital gains on listed equity shares and equity-oriented schemes of mutual funds under Section 111A of the Act, on which tax is payable at a flat rate of 15%.
Note: Rebate under Section 87A cannot be adjusted against tax on long-term capital gains on equity shares and equity-oriented mutual funds (Section 112A).

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (177840 Points)
Replied 07 July 2024

112A. (1) Notwithstanding anything contained in section 112, the tax payable by an assessee on his total income shall be determined in accordance with the provisions of sub-section (2), if—

(i) the total income includes any income chargeable under the head "Capital gains";

(ii) the capital gains arise from the transfer of a long-term capital asset being an equity share in a company or a unit of an equity oriented fund or a unit of a business trust;

(2) ......

(3) .......

(4) ......

(5) Where the gross total income of an assessee includes any long-term capital gains referred to in sub-section (1), the deduction under Chapter VI-A shall be allowed from the gross total income as reduced by such capital gains.

(6) Where the total income of an assessee includes any long-term capital gains referred to in sub-section (1), the rebate under section 87A shall be allowed from the income-tax on the total income as reduced by tax payable on such capital gains.

Lastly, you are requested to file grievance with the screenshot, and see what reply you get.

Upgrade to CAclubindia Pro. Subscribe Now!

Megha Gulati (9 Points)
Replied 07 July 2024

Hi Karan,

I am facing the same issue as you. Until last week the portal and the calculator were working correctly. Both of them were giving the exact same calculation and full rebate including the amount for STCG. However, now the portal is not giving rebate the STCG but the calculator is still working fine. I do not understand, how things changed as Last Saturday the portal was showing the correct numbers. Please let me know if you find a way to get this sorted.

Thank you

1 Like

Karan (.) (65 Points)
Replied 07 July 2024

Originally posted by : Megha Gulati
	Hi Karan,I am facing the same issue as you. Until last week the portal and the calculator were working correctly. Both of them were giving the exact same calculation and full rebate including the amount for STCG. However, now the portal is not giving rebate the STCG but the calculator is still working fine. I do not understand, how things changed as Last Saturday the portal was showing the correct numbers. Please let me know if you find a way to get this sorted.Thank you

There was an update to ITR on July 5, a new version 1.1.2 of ITR was released which seems to have created this bug.
ITR 3 is calculating rebate correctly, only ITR 2 is having this issue.
I have filed a grievance on IT portal and also tweeted with a tag to IncomeTaxIndia and it seems at least 4-5 other people have done the same. Hopefully ITD will realize the mistake and fix the bug soon, until then have to wait, you can try posting too, more people saying this will bring their attention more quickly.

1 Like

PARTH JANI (STUDENT) (22 Points)
Replied 08 July 2024

Hello Megha and Karan,

I am facing the same issue as you. As rebate u/s 87A is allowed against STCG which is taxable u/s 111A. If you find any solution to this do let me know.

Thanks in advance.

Sukant Arora (9 Points)
Replied 08 July 2024

87a working on old tax regime but not in new tax regime not considering special income rebate in new tax regime but working fine in old tax regime seems some temporary bug

1 Like

KALYANASUNDARAM P R (4 Points)
Replied 08 July 2024

5th July 2024 update ITD 1.1.2 VERSION is having this issue is ITR 2 and ITR 3.

The Rebate is not calculating on Tax on STCG under 111A.

Before 5th July in the previous version, Rebate was calculated properly.

IT department may solve this issue in the next update.

Any resolution guys?

Upgrade to CAclubindia Pro. Subscribe Now!

KALYANASUNDARAM P R (4 Points)
Replied 08 July 2024

ITR 3 AND ITR 2 HAS THE ISSUE

Karan (.) (65 Points)
Replied 08 July 2024

My grievance on this matter was closed by saying that rebate is not available in old regime, even though I clearly mentioned new regime, it seems ITD is only concerned in closing grievance as quickly as possible rather than actually helping people

On twitter I received following reply, hopefully they actually did share this ahead and get it fixed.

Thank you for sharing your feedback, we have noted your concern and shared them ahead.

Megha Gulati (9 Points)
Replied 08 July 2024

Even I got a very vague response for the grievance I had raised for this issue. I do not think so they are able to understand what the issue is or even bothered to atleast have a look into it. I think we need to let them know that this issue is arising after their update. Do any of you know if their is any other way around for this if they do not solve it before the deadline?