Treatment of LTCG for MF sale for rebate u/s 87A of IT Act

ITR 261 views 6 replies

Parag Godkar

7 Points Joined August 2021

Hi, I have an Income Tax related question for F.Y.2020-21. Would appreciate if someone can guide.

My father is 75 years old. Among other income, he has a income in form of LTCG from sale of equity MFs amounting to less than 1 lac. Hence LTCG is not taxabale.

However, can someone clarify that for claiming rebate u/s 87A of IT Act, taxable income is to be considered before substracting LTCG or after substracting LTCG? Before subtracting LTCG, his taxable income is more than 5lacs.
(As per u/s 87A, one can claim an income tax rebate upto INR12,500/- under section 87A if one's total taxable income does not exceed Rs 5 lakh in a financial year)

Replies (6)

Samantha J

1236 Points Joined March 2019

Good question. Taxable income before subtracting LTCG is applicable! Since in your case it's more than 5L, rebate 87A will not be available!
The question put by you is a very difficult one and a lot of CA don't know the answer!

Parag Godkar

7 Points Joined August 2021

Hi Samantha,

Thanks a ton for your reply. Much appreciated.

You are right in saying that a lot of CA don't know the answer for a lot of them couldn't answer in my other groups that I posted.

Samantha J

1236 Points Joined March 2019

You can check by visiting a nearby CA!
We are living in a world where one must teach the job to the person sitting behind the desk so that your problem is resolved.You can check the veracity of the statement by reflecting on other areas of present day life!

Parag Godkar

7 Points Joined August 2021

Yes, thanks. I decided to file returns through Cleartax. Their assigned CA also stated that rebate 87A will not be available since my father's net income is greater than 5Lacs.

Parag Godkar

7 Points Joined August 2021

I completely agree to this statement of yours:

"We are living in a world where one must teach the job to the person sitting behind the desk so that your problem is resolved.You can check the veracity of the statement by reflecting on other areas of present day life!"

I am not from finance background, but I have taken efforts to prepare the IT Returns for my father and me, for I do not trust the local CAs. They used to file returns as is before I started working out the details. It took time, but was worth the efforts.

Samantha J

1236 Points Joined March 2019

Yes good. The problem has been compounded because everyone is an engineer, doctor, CA , arbitrator etc. How does one find who is right.For this one must know the job of the person who is sitting behind the desk!