In order to allow taxpayers to receive the 87A tax refund, the Bombay High Court granted an interim remedy by directing the tax department to extend the revised and belated ITR filing date to January 15, 2025.
Taxpayers have two days left to complete their updated income tax return (ITR) for FY 2023–2024 in order to be eligible for a tax refund under section 87A.Notably, the income tax administration just made available Excel tools for ITR forms ITR-2 and ITR-3, which allow users to exercise their right to a refund under Section 87A.
To claim the section 87A tax rebate, you must first manually modify and then validate the tax rebate column in the ITR excel application.
As you may remember, the debate surrounding the section 87A tax refund started in July of last year when the tax department modified its ITR software. As a result, many taxpayers were unable to claim the section 87A tax refund for special income, such as short-term capital gains on equity shares, on their income tax returns (ITR). They received demand notices to claim it in certain instances.
In order to allow taxpayers to collect the 87A tax refund, the Bombay High Court subsequently granted an interim remedy, directing the income tax administration to extend the revised and belated ITR filing date until January 15, 2025.
"The I-T Department has modified the ITR utility to claim the benefit of a rebate under the New Tax Regime if you have a special income, such as Short Term Capital Gain on listed equity shares, in accordance with the Bombay High Court's interim judgment. The tool does not, however, calculate the rebate automatically; instead, the amount of the rebate must be manually entered. Taxpayers must amend their ITRs by January 15, 2025, if they wish to receive the reimbursement, according to CA Pratibha Goyal, partner at Delhi-based PD Gupta and Company.
87A rebate: what is it?
For those who are unaware, section 87A's rebate allows taxpayers to avoid paying taxes up to ₹5 lakh under the previous tax regime and up to ₹7 lakh under the current one.
The maximum rebate amount under the previous system was ₹12,500, whereas under the current one, it is ₹25,000.
Nonetheless, some experts think that since taxpayers do not have enough time to claim refunds due to rebates, the deadline should be further extended.
Since the forms and utilities for claiming rebate 87A were changed just a few days ago, the Income Tax Department ought to move the deadline for filing amended returns from January 15 to January 31. Furthermore, the revised Income Tax Returns (ITR) should be processed by the CPC without needing taxpayers to appear in court once more. According to chartered accountant Chirag Chauhan of Mumbai, "since the tax department has collected incorrect taxes from taxpayers on a large number of ITRs, these issues should ideally be automatically rectified by the department and refunds should be processed accordingly."
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