Facing Intimation Orders with Demands for AY 2024-25

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Niyati

Student

13074 Points Posted on 24 September 2024

The Income Tax Department now a day’s reviewing ITRs to identify if taxpayers have discrepancies or incorrect claims.

Issues may be related to

Disallowed deductions which are exceeding permissible limits (e.g., excess u/s 80C).
Disallowance of expenses from the audit report not considered in ITR.
Mismatch in income/tax details from Form 26AS/16/16A.
Claimed incorrect loss carry-forward for late returns.

Change made in July

The government updated the utility and removed the 87A rebate benefit for special rate incomes in the New Regime.

Impact

Many taxpayers are now receiving tax demands as they can’t claim the 87A rebate, and switching to the Old Regime in a revised return is not allowed.

Now, taxpayers are required to pay taxes on Special Rate incomes without the 87A rebate.

Replies (2)

Quick Summary

The Income Tax Department is issuing demands for AY 2024-25 due to discrepancies in ITR filings, such as excess deductions or mismatches with Form 26AS. A key issue arises from the removal of the Section 87A rebate benefit for special rate incomes in the New Tax Regime, preventing taxpayers from claiming it even in revised returns. The recent Beena Manishbhai Fofaria vs. CIT (Appeals) case clarifies that short-term capital gains are eligible for the Section 87A rebate if total income remains below £7,00,000, providing relief to many taxpayers.

Richard Edward

47 Points Posted on 20 November 2024

The Income Tax Department is closely reviewing ITRs for discrepancies like excess deductions, mismatched income details, or incorrect claims. With the 87A rebate removed for special rate incomes in the New Regime, many taxpayers face higher tax demands, as switching to the Old Regime in revised returns isn’t allowed. Accurate filing is now more crucial than ever.

Dhirajlal Rambhia

SEO Sai Gr. Hosp.

121521 Points Posted on 08 December 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.