No tax rebate u/s 87A allowed on short term capital gains from equities despite being eligible, what experts demand from govt

economictimes.indiatimes.com:

Income tax rebate under section 87A of the Income-tax Act 1961, is a tax benefit which reduces a taxpayer's net quantum of tax payable to nil if they meet the total income condition. It is given only to those taxpayers who have an income up to Rs 5 lakh under the old tax regime or up to Rs 7 lakh under the new tax regime. However, following an update in the ITR filing utility on July 5, 2024, experts have noted that many taxpayers were denied the benefit of tax rebate under section 87A if they had a special rate income.

According to Anand Bathiya, president, Bombay Chartered Accountants' Society (BCAS), «Post 5th July 2024 the income tax return (ITR) filing utilities are not allowing the rebate under section 87A for various special rate incomes, including short-term capital gains on equity shares or equity oriented mutual funds taxable at 15% under Section 111A.»

Denial of section 87A tax rebate since July 5, 2024, is increasing your tax liability

As per Bombay Chartered Accountants' Society, the new ITR filing utilities are not allowing the rebate under section 87A for various special rate incomes, including short-term capital gains on equity shares or equity-oriented mutual funds taxable at 15% under Section 111A.

«Consequently, taxpayers with total incomes up to Rs 5 / 7 lakhs under the old / new regimes are forced to pay income tax on their special rate taxable incomes (excluding Section 112A), contrary to the legislative provisions of the Income Tax Act, 1961 due to a faulty return filing utility,» said the