Soon income tax dept to correct ITR-2, 3 forms to allow eligible taxpayers to claim 87A tax rebate for FY 2023-24: The Income Tax Department has announced good news for taxpayers who are eligible to claim section 87A tax rebate for FY 2023-24 but were unable to claim it. The tax department has announced this relief on the income tax return (ITR) e-filing portal late night on December 31, 2024. As per the announcement eligible taxpayers will be able to soon file a revised or belated income tax return to avail section 87A tax rebate either through the ITR filing utility or online on the e-filing portal. This relief follows the interim judgement by Bombay High Court directing the tax department to extend revised and belated ITR filing deadline for eligible taxpayers to claim 87A tax rebate.
The necessary back end software related changes in the online ITR form will be made shortly to give effect to this (87A rebate claim). Under section 87A of the Income Tax Act, 1961, eligible taxpayers can claim tax rebate up to Rs 12,500 under the old tax regime and up to Rs 25,000 under the new tax regime.
“The updated utilities for ITR forms 2 and 3 giving effect to the Circular No. 21 dated 31st December 2024 and including the option to update 87A rebate will be made available shortly,” said the Income Tax Department on the e-filing ITR portal on December 31, 2024.
Soon option to claim 87A tax rebate by filing revised/belated ITR-2 or ITR-3 form will be enabled
The back end changes will be made only for ITR-2 and ITR-3 form as the ITR e-filing utility since July 5, 2024 was not allowing 87A rebate claims if the taxpayer had any short term capital gains income (STCG).
Chartered Accountants reported at that time that many taxpayers who had filed ITR using the e-filing portal post July 5, 2024 and claimed a tax rebate in the ITR which had short term capital gains also were sent tax notices later on. ITR-2 and ITR-3 are the only ITR forms where an individual can offer his capital gains income for tax.
Chartered Accountant Ashish Niraj, partner, A S N & company, says, “This news flash from the tax department means now eligible taxpayers can claim 87A tax rebate through filing a revised or belated ITR through the utility or online web based ITR filing facility (e-filing portal) soon. To give effect to this change the utility software of the specific forms where capital gains taxation income can be offered (ITR-2 and 3) will be updated. The circular (circular number 21/2024) from the department released yesterday only mentioned that the revised and belated ITR filing deadline has been extended for all resident individual taxpayers.”
Latest update income under sub-section (4) of section 139 of the Act or for furnishing revised return of income under sub-section (5) of section 139 of the Act for the Assessment Year 2024-25 in the case of resident individuals from 31 st December, 2024 to 15th January, 2025.”