Income Tax Portal Update Denies Rebate for Short-Term Capital Gains

Last updated: 20 July 2024

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Quick Summary

A recent update to the income tax portal has led to an unexpected issue where taxpayers with short-term capital gains are being denied a rebate of up to £25,000, even if their total income is below £7 lakh. This contradicts the Income Tax Act, 1961, as tax experts state the rebate should still apply. The issue appears to stem from a misinterpretation by the updated utility regarding taxable income, affecting many low-income earners who previously qualified.

Overview of the Issue After a recent update to the tax-filing utility on the income tax portal this month, many taxpayers are facing the unexpected issue of being denied a valid rebate of up to Rs 25,000 under the new tax regime. This problem specifically affects those who have booked short-term capital gains, contradicting the provisions of the Income Tax Act, 1961. Understanding the Rebate A rebate is designed to provide relief on income tax for low-income earners, encouraging them to fil

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FAQ :

A recent update to the tax-filing utility is denying a rebate of up to £25,000 under the new tax regime to taxpayers who have booked short-term capital gains, despite their income being below £7 lakh.

Taxpayers opting for the new tax regime who have short-term capital gains (STCG) taxed at 15 percent included in their income are being affected, even if their net income is below £7 lakh.

No, tax experts argue that the Income Tax Act does not state that special incomes like STCG should be excluded from the rebate under Section 87A, except for specific long-term capital gains on equity shares.

Yes, the rebate was available for returns filed before July 5, 2024, and the utility allowed it even with the inclusion of short-term capital gains.

Genuine taxpayers may lose out on a rightful tax benefit of up to £25,000, and many could receive notices later in the year due to this incorrect interpretation by the tax utility.

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CCI News Desk

Finance news reporter covering taxation, GST, income tax, business compliance, and economy updates. I simplify complex financial topics into easy-to-understand articles for professionals, taxpayers, and business owners on leading finance and tax platforms.

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