Income tax demand for 87a rebate not allowed on STCG

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Chahat Khanna

Chahat Khanna (Querist)
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24 September 2024 Resolved and deleted.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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25 September 2024 No remedy now, you will have to pay the demand. That was defect in the utility for the STCG rebate u/s. 87A under new regime; which was rectified in newer version.

Chahat Khanna

Chahat Khanna (Querist)
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29 September 2024 Resolved and deleted.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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29 September 2024 Even if it was disputed matter, but CPC is strong on its stand. All those who had availed this rebate by filing ITR before 5th July, 2024; have received the demand for the difference.
The interest gets accrued if the demand is not paid within 15 days.
No question of changing regime now.

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Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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11 October 2024 The case of **Beena Manishbhai Fofaria vs. CIT (Appeals)** revolves around the application of **Section 87A** of the Income Tax Act, especially after the amendments brought by the Finance Act, 2023.

In this case, the taxpayer filed her return for the Financial Year 2023-24, declaring a total income of Rs. 6,93,260, which included short-term capital gains (STCG) of Rs. 65,066. She claimed a rebate of Rs. 20,010 under Section 87A, as her total income was under Rs. 7,00,000. However, the Centralized Processing Centre (CPC) restricted the rebate to Rs. 10,250, disallowing the rebate on STCG. This led to a reduced refund amount, prompting the taxpayer to file an appeal.

The CIT (Appeals) ruled in favor of the taxpayer, stating that the Finance Act, 2023, permits a rebate on total income (excluding long-term capital gains taxed under Section 112A) if the total income is within Rs. 7,00,000. The ruling confirmed that short-term capital gains are eligible for the rebate if the total income is under Rs. 7,00,000.

This case is significant as it clarifies the application of Section 87A and benefits many taxpayers.

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