Here's a point-to-point summary of the article about cases where no income tax rebate under Section 87A is allowed, even if the total income is below Rs 7 lakh:
1. No Rebate for LTCG
Long-term capital gains (LTCG) from the sale of listed equity shares or equity-oriented mutual funds do not qualify for the 87A rebate, even if total income is below Rs 7 lakh.
2. Tax Regime Default Setting
From AY 2024-25 onwards, the new tax regime is the default. To opt out, individuals must file their ITR by the deadline (July 31, 2024) and select the "Opt-out" option.
3. Eligibility Criteria for Rebate
- Under the new tax regime, individuals with total income up to Rs 7 lakh can get a tax rebate up to Rs 25,000.
- Under the old tax regime, a rebate up to Rs 12,500 is available if the total income is up to Rs 5 lakh.
4. Rebate Denied for Certain Incomes
- Tax rebates are not given for special rate incomes like speculative income and virtual digital asset (VDA) income.
- Section 87A rebate is not available to non-residents.
5. Short-term Capital Gains (STCG)
Rebates are available for short-term capital gains, as section 112A does not explicitly deny this rebate for such gains.
6. Late Filing Consequences
If ITR is filed after the deadline, individuals lose the option to select the old tax regime, affecting their eligibility for certain deductions and potentially the rebate.
7. Example of Rebate Denial (refusal)
- Salary income: Rs 4.5 lakh.
- LTCG income: Rs 1.5 lakh (total income Rs 6 lakh).
- Only the Rs 4.5 lakh salary income is eligible for a rebate, while the LTCG portion is taxed separately without a rebate.
8. Impact of Belated ITR
Filing a belated ITR restricts the option to select the old tax regime, making it harder to claim the rebate due to limited deductions under the new regime.
These points highlight the scenarios in which Section 87A rebates are denied despite total income being below Rs 7 lakh, emphasizing the importance of correctly understanding the tax regime rules and filing deadlines.
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