Taxpayers who missed out on claiming the Section 87A tax rebate while filing income tax returns for the financial year 2023-24
and assessment year 2024-25 have been given another chance. The Income Tax Department has updated its online and offline utilities for ITR Forms 2 and 3.
This update allows taxpayers to file revised or belated returns and claim the Section 87A rebate.
Taxpayers can now use the income tax portal to file returns again and avail of this benefit for the assessment year 2024-25.
Filing Returns with Updated Utilities
The Income Tax Department announced on its return filing portal that both offline and online utilities have been updated for ITR Forms 2 and 3.
With this update, eligible taxpayers can file revised or late returns to claim the Section 87A tax rebate.
This move provides relief for taxpayers who missed claiming rebates due to earlier restrictions.
Bombay High Court Intervention
The updates come after a directive from the Bombay High Court during a hearing on a PIL filed by The Chamber of Tax Consultants.
The court ordered the extension of the income tax return filing deadline for affected taxpayers to January 15, 2025.
This decision follows the Central Board of Direct Taxes (CBDT) stopping rebates under Section 87A for taxpayers who filed returns after July 5, 2024, despite being eligible.
The High Court’s interim decision has allowed taxpayers to claim the rebate through revised utilities, with a final ruling expected on January 9, 2025.
Tax Rebate on Equity Income Initially Stopped
On July 5, 2024, the Income Tax Department stopped allowing Section 87A rebates for short-term capital gains from equity shares or income from equity-oriented mutual funds, which are taxed at 15%.
This move faced criticism. However, following the court’s intervention, the department has updated its utilities, enabling eligible taxpayers to claim rebates again.
This step ensures that taxpayers can avail of their rightful benefits and avoid being penalized due to changes in the filing process.
