Rebate u/s 87A under old regime - LTCG u/s 112A

This query is : Resolved

niki (Querist)
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12 July 2025 Hi,

An assessee has income from other sources - Rs. 6.2 lacs and LTCG from sale of equity oriented MF units - 1.60 lacs. The assessee can claim 80C, 80D & 80TTA deduction tottaling to Rs. 1.65 lacs via old regime.

Since LTCG u/s 112A is not taxable upto 1.25 lacs and if assesse opts for old regime and claims VI-A deductions of Rs. 1.65 lacs, his total income will be below Rs. 5.00 lacs, will he be eligible to claim rebate u/s 87A under the old regime?

Thanks
Niki

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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12 July 2025 Yes, but he will have to pay tax over LTCG of Rs. 35K... (@ 12.5 %)

niki

niki (Querist)
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14 July 2025 Thank you Sir...

But in the excel utility ITR 2 of income tax department; the total income is considered at Rs. 6.15 lacs (Rs. 6.2 + Rs. 1.60 - Rs. 1.65) and the rebate u/s 87A is shown as zero. But tax is calculated @ 12.5% only on LTCG of 35k (Rs. 1.6 - Rs. 1.25)

So it seems ITR 2 considers total income inclusive of the exepmt LTCG of Rs. 1.25 lacs and denies 87A rebate as income exceeds Rs. 5 lacs. but in tax calculation it computes LTCG tax only on 35k after deducting 125k expemtion.

Is this correct ? please advise.

Thanks

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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14 July 2025 No. It is not correct; without rebate calculation, chances of demand can arise in future. It is bug in the software, File Grievance with screenshot.

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