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No Section 87A tax rebate despite ITR filing forms being updated recently
87A tax rebate: The ITR filing utilites for ITR-2 and ITR-3 has been updated on January 4, 2025 however, the JSON schema is not yet updated and it still reflects logic as of July 5, 2024. This means you can file a revised or belated ITR now but the utility will not let you claim section 87A tax rebate if any special rate income like short term capital gains exists. Read the story to know how a makeshift solution can help you claim 87A tax rebate now.
The Income Tax Department updated the income tax return forms for ITR-2 and ITR-3 on January 4, 2025. The ITR forms have been updated to allow the taxpayers to claim Section 87A tax rebate on short-term capital gains on equity, which they were denied during the July ITR filing. However, despite the income tax e-filing accepting the claim, the income tax department is rejecting the Section 87A rebate. This rejection is happening at the time of processing the ITR because the software linked for processing the ITR forms has not been updated. Under section 87A eligible taxpayers can claim up to Rs 25,000 tax rebate under the new tax regime. Under the old tax regime up to Rs 12,500 tax rebate can be claimed by eligible taxpayers under section 87A.
There is no use in filing a revised ITR to claim Section 87A tax rebate, if eligible, as the ITR is going to get processed with the same logic as of July 5, 2024. If you recall post July 5, 2024 the logic of ITR processing software was changed to prevent eligible from claiming 87A tax rebate if special rate income like short term capital gains existed in the ITR. The last date to file revised and belated returns for FY 2023-24 (AY 2024-25) has been extended to January 15, 2025, from the original deadline of December 31, 2024.
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