If you were among those who missed out on a tax rebate under Section 87A in July 2024, there’s good news. The Income Tax Department has given you another chance to claim this rebate, but you must revise your return by January 15, 2025. This applies even if your return has already been processed, whether you’ve received a refund or paid extra tax.
You have a chance to revise your income tax return and claim tax rebate by January 15, 2025.
Why Was the Tax Rebate Denied in July 2024?
In July 2024, many taxpayers were wrongly denied the Section 87A tax rebate. These especially included the ones with ‘special rate’ incomes like short-term capital gains (STCG) from the sale of shares.
For example, if a person earned Rs 5 lakh as salary and Rs 2 lakh from STCG, they should have been eligible for the rebate. However, due to an update in the software after July 5, 2024, the rebate was only applied to the salary portion, and the STCG portion was excluded.
Example of Tax Rebate Denied
Let’s say Taxpayer A had a salary income of Rs 5 lakh and earned Rs 2 lakh from selling shares (STCG). She filed her income tax return on July 30, 2024, under the new tax regime, and was eligible for the tax rebate. But due to an update in the system after July 5, 2024, her tax rebate was denied on the STCG income. Instead, the rebate was only applied to her salary income.
Know the difference between the old and new tax regimes!
Despite requests from taxpayers and experts to fix this, the tax department did not take action until the Bombay High Court stepped in.
Court Order and Extended Deadline
On December 20, 2024, the Bombay High Court passed an order to extend the deadline for filing belated or revised returns. This extension gives affected taxpayers the chance to revise their returns and claim tax rebates by January 15, 2025.
What You Need to Do
If your tax rebate was denied, too, you now have a chance to claim tax rebate. However, you must revise your income tax return by January 15, 2025. Even if your return has already been processed and you’ve either received a tax refund or paid extra tax, you can still revise it.
Tax experts suggest that while the tax department has all the data, it won’t automatically update your return. You’ll need to revise it yourself to claim tax rebate.
Here is something you need to know.
For example, someone earning Rs 7 lakh and having Rs 2 lakh in STCG might have received the tax rebate even though their income exceeds the limit.
Therefore, it’s important to carefully review your income tax return before submitting any revisions.
What About Other Taxpayers?
Even if you weren’t denied the tax rebate, there’s an important point to consider. The deadline for filing belated or revised returns is usually December 31 of the following year. This extension applies to all taxpayers, not just those impacted by Section 87A issues.
It’s important to check if the updated forms have any new conditions for taxpayers with incomes above Rs 5 lakh (old tax regime) or Rs 7 lakh (new tax regime). You’ll need to carefully review the new ITR forms to understand the rules.
Conclusion
If you were denied the tax rebate under Section 87A in July 2024, you should not miss this chance. Please revise your income tax return by January 15, 2025. This is your opportunity to claim the tax rebate you were initially denied.
You can also check your income tax refund status after filing your e-tax filing to see if any refund is due.
Source: MoneyControl
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