ITR 2 calculating wrong rebate 87A

I am also facing the same issue.

MY Income as follows :

(1) income from saving bank a/c : 17121

(2) income from FDs  : 3,55,074

(3) dividend income : 4805

(4) STCG on shares : 30,078

(5) LTCG shares : 64,654

My tax is coming around 4500 despite 87 A rebate. in fact it should be zero.

I am also facing same issue. 87A rebate not allowing for 111A STCG under new regime in ITR2. When I choose old regime, it allows the rebate though.

Seems ITD is taking stance that no rebate will be given for any tax that is charged at special rate. Grievance reply someone else got - 


Following proviso shall be inserted in section 87A by the Finance Act, 2023, w.e.f. 1-4-2024 : Provided that where the total income of the assessee is chargeable to tax under sub-section (1A) of section 115BAC, and the total income—

This is very odd interpretation from ITD as section 87A only talks about total income under 115BAC
which means opting for new regime.
The word "total" gives very clear meaning, if rebate was actually only intended for not special rate income, the word "total" would have been missing.

Regardless if this interpretation is still to be accepted somehow then it means that all ITRs filed before July 5 where rebate was claimed on special rate income are defective returns and ITD has given no clarification on same either.

With only 10 days left, don't think any change will happen, so paid the tax today and filed ITR.

The most common reason ITR-2 calculates 87A rebate differently than expected is the treatment of capital gains from equity and equity MFs.

For AY 2026-27, the 87A rebate is NOT applied against tax on income taxed at special rates. This means:
- LTCG from listed equity and equity MFs under Section 112A (taxed at 12.5%): Rebate not available
- STCG from listed equity under Section 111A (taxed at 20%): Rebate not available in the new regime

Example: Your total income is Rs 10 lakh, of which Rs 2 lakh is LTCG from equity MFs.
Regular income: Rs 8 lakh, slab-rate tax in new regime = 0 (87A rebate covers it, total is under Rs 12 lakh threshold)
LTCG component: Rs 2 lakh at 12.5% = Rs 25,000 (87A does NOT apply here)
Final tax: Rs 25,000 + surcharge + cess

The ITR-2 utility is computing this CORRECTLY. It separates the two computations. If you expected full rebate but the utility shows tax due, it is because of your LTCG or STCG component.

If you are in the OLD regime and total income is below Rs 5 lakh but still showing tax, check:
- Whether any income (lottery, winnings under Section 115BB) is separately taxed
- Whether your STCG from equity exists (Section 111A)
- Whether the regime selection in the return matches your actual intention

For what happens if a wrong 87A rebate claim leads to a later income tax demand and refund adjustment, this [income tax notice and refund adjustment guide](https://taxgarden.in/blog/section-245-income-tax-notice-refund-adjusted-demand-india) explains Section 245 and how to respond.