Income Tax Deadline! With last two days to go, you can you claim 87A rebate with new ITR forms; check details | Mint

With only two days to go before the deadline to file revised income tax return (ITR) for FY 2023-24 expires, taxpayers can claim tax rebate under section 87A.

Notably, the income tax department recently released excel utilities for ITR forms ITR-2 and ITR3 to exercise the option to claim rebate u/s 87A.

However, you have to manually edit the tax rebate column in the ITR excel utility and then validate it in order to claim section 87A tax rebate.

If you recall the section 87A tax rebate controversy began when the tax department made changes to its ITR software in July last year. This resulted in several taxpayers not being able to claim section 87A tax rebate for special income when filing income tax returns (ITR) such as for short-term capital gains on equity shares. In some cases, they were sent demand notices for claiming it.

Following this, Bombay High Court gave an interim relief by ordering the income tax department to postpone the revised and belated ITR filing deadline to January 15, 2025 so that taxpayers can claim 87A tax rebate.

“In line with the interim order of Bombay High Court, I-T Department has updated the ITR utility to claim the benefit of rebate under New Tax Regime if you have a special income such as Short Term Capital Gain on listed equity shares. However, there is no automatic rebate calculation done by the utility and the rebate amount should be manually entered. In case taxpayers want to take the benefit of rebate, they need to revise the ITR by 15th January 2025,” says CA Pratibha Goyal, partner PD Gupta and Company, a Delhi-based CA firm.

What is 87A rebate?

Those who are not aware rebate under section 87A allows taxpayers to not pay any tax upto ₹5 lakh (under old tax regime) and upto ₹7 lakh under the new tax regime.

Under this old regime, the maximum amount of rebate is ₹12,500 and in the new regime, the maximum rebate amount is ₹25,000.

However, some experts believe that the deadline should be further extended since taxpayers have not adequate time to claim refunds on account of rebate.

“The Income Tax Department should extend the due date for filing revised returns from January 15 to January 31, as the forms and utilities were updated only a few days ago for claiming rebate 87A. Additionally, the CPC should process the updated Income Tax Returns (ITR) without requiring taxpayers to go to court again. Ideally, since many ITRs were incorrect taxes have been collected from taxpayers by the tax department, these issues should be automatically rectified by the department, and refunds should be processed accordingly,” says CA Chirag Chauhan, a Mumbai-based chartered accountant.