Hi All,
I am filing ITR2 since I have LTCG on sale of shares along with Salary Income. LTCG is Rs 29,916 and so not taxable. My taxable income without considering LTCG is Rs 4,78,932. In ITR 2, in the Computation of Total Income section, I see the following:
When I go into the final section, Computation of Tax Liability on Total Income, below is what i see :
Why am I denied Rebate under 87A ? Is this a bug in the implementation of ITR 2 ? If so, how to get this fixed ?
Hi Ajesh,
Your issue about Rebate under Section 87A not showing in ITR-2 despite aggregate income being below ₹5 lakh is a common confusion. Let me clarify:
Section 87A Rebate applies only on the net taxable income after all deductions and exemptions, including Long Term Capital Gains (LTCG).
However, LTCG under Section 112A (like shares) is exempt up to ₹1 lakh, and beyond that, taxable at 10%.
In your case, LTCG is ₹29,916 and not taxable (below the exemption limit).
But, importantly, rebate under 87A is calculated on the total tax payable on total income excluding exempt income.
Even if your total income (including exempt LTCG) is less than ₹5 lakh, the rebate under 87A applies only if the total taxable income (after exemptions/deductions) is less than ₹5 lakh.
Since LTCG is exempt, your taxable income is ₹4,78,932 (salary part), which is under ₹5 lakh, so you should be eligible.
In ITR-2 computation, LTCG income, even if exempt, may be causing the system to not apply the rebate properly due to how total income and tax calculations are processed.
This is a known issue in some versions of ITR-2 utility.
Update your ITR-2 utility to the latest version (download from Income Tax e-filing portal). Many bugs have been fixed in recent versions.
Check your computation details carefully:
Confirm that taxable income (excluding exempt LTCG) is less than ₹5 lakh.
Check if the system is showing tax on LTCG separately and not merging correctly.
Manually compute tax liability using the tax slabs and check if rebate should apply.
If rebate is not applied by the utility, you can claim refund after filing by submitting a letter or representation.
Alternatively, consider filing ITR-1 (if possible) or ITR-3 based on income sources, but LTCG mandates ITR-2 generally.
If issue persists, raise grievance on the e-filing portal or seek help from a tax consultant.
Rebate 87A applies if taxable income ≤ ₹5 lakh.
LTCG exempt income included in total income may cause the rebate not to show in ITR-2.
Update software and manually verify tax calculations.
If required, file return and claim refund later.
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