Taxpayers who were eligible for the 87A tax rebate but couldn’t claim it while filing their income tax returns for the financial year 2023-24 and assessment year 2024-25 have some good news.
The Income Tax Department has announced that the option to claim the rebate will be available through an update to the Income Tax Return utility forms (Form No. 2 and 3).
This will allow taxpayers to claim the rebate by filing revised or belated returns.
The Income Tax Department has announced on its e-filing portal that the utility in Income Tax Return Form No. 2 and 3 will be updated to reflect Circular No. 21, issued on December 31, 2024.
This update will include an option for taxpayers to claim the 87A tax rebate. The facility will be available to taxpayers soon.
The Bombay High Court recently provided significant relief to taxpayers eligible for the 87A tax rebate under the Income Tax Act.
In its interim ruling, the court directed the Central Board of Direct Taxes (CBDT) to extend the deadline for filing revised and belated income tax returns until January 15, 2025,
allowing taxpayers to claim the 87A rebate. The court will issue its final decision on the matter on January 9, 2025.
What is the matter?
A PIL was filed in the Bombay High Court in July 2024, challenging the decision not to provide tax rebates under 87A to eligible taxpayers for the financial year 2023-24 and assessment year 2024-25.
The petition was prompted by the CBDT’s sudden halt in offering the tax rebate to taxpayers who filed their income tax returns after July 5, 2024.
The filing deadline will be extended only for those taxpayers who are eligible to claim the 87A rebate.
The Income Tax Department has stopped providing tax rebates under section 87A for special income, such as short-term capital gains from equity shares or income from equity-oriented mutual funds, which is taxed at 15%.
The CBDT abruptly halted the tax rebate under 87A for this income in the income tax return filing utilities.
