Eligible taxpayers can now submit amended ITR forms to the Income Tax Department to obtain the section 87A tax refund. This comes after the Bombay High Court ordered an extension of the deadline for late or amended returns.According to a Business Today report, the Income-Tax (I-T) Department is now enabling taxpayers who are eligible for the section 87A tax refund for FY24 to claim it on the new Income-Tax Return (ITR) forms, ITR-2 and ITR-3.
Eligible taxpayers can now submit amended ITR forms to the Income Tax Department to obtain the section 87A tax refund. This comes after the Bombay High Court ordered an extension of the deadline for late or amended returns.
According to a Business Today report, the Income-Tax (I-T) Department is now enabling taxpayers who are eligible for the section 87A tax refund for FY24 to claim it on the new Income-Tax Return (ITR) forms, ITR-2 and ITR-3.
What does 87A's refund mean?
Taxpayers can lower their income tax obligation by using the Section 87A refund. If the total income is less than ₹5 lakh (under the previous tax system) or ₹7 lakh (under the current one), the aforementioned rebate can be claimed. Income tax burden is reduced to "nil" after receiving the refund under Section 87A.
Anand Bathiya, president of the Bombay Chartered Accountants' Society (BCAS), told Livemint at the time that since July 5, taxpayers have been having issues because "income tax 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 at 15 per cent under section 111A."
In effect, this means that even if a taxpayer's total income under the new tax regime is less than ₹7 lakh, they will not be able to claim the rebate if they have income under short-term capital gains that have accrued from the selling of stocks or equity mutual funds.
Context: Letter to CBDT
Piyush S. Chhajed, the chairman of the ICAI's direct tax committee, wrote to the CBDT on July 16 asking the board to approve a refund under section 87A.
The letter states that the tax agency has already been notified of the problem. The letter states, "When a grievance was raised in this regard, the income tax department helpdesk replied that the refund is only allowed on tax for income chargeable at normal rates and is not allowed on tax for any income chargeable at special rates."
In response, the letter states, "This does not reflect the correct position of law, as only section 112A places such restriction, and not sections 111A or 112."
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