ITR filing deadline extension: Bombay HC orders tax dept to allow these taxpayers claiming 87A rebate to file ITR till January 15, 2024
Sometimes you need to fight against the government authorities for your rights rather than keeping your head down and accepting whatever is being imposed. The best example for this analogy should be the recent section 87A tax rebate fiasco, where many taxpayers who filed ITR after July 5, 2024, were denied, despite them being eligible for it. All over the country, taxpayers approached courts in hope of justice and the Bombay High Court delivered.#sr_widget.onDemand p, #stock_pro.onDemand p{font-size: 14px;line-height: 1.28;} .onDemand .live_stock{left:17px;padding:1px 3px 1px 5px;font-size:12px;font-weight:600;line-height:18px;top:9px} #sr_widget.onDemand .sr_desc{margin:0 auto 0;} #sr_widget.onDemand .sr_desc{color: #024d99;margin-top:10px;} #sr_widget.onDemand .crypto .live_stock .lb-icon{8px 6px 5px 3px !important} #sr_widget.crypto.onDemand a.text{border-bottom:1px solid #ccc;padding-bottom:5px;display:block;width:100%} #sr_widget.onDemand .sr_desc .text p, #stock_pro.onDemand .sr_desc .text p{font-size:12px;font-weight:400;}
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The Honourable Bombay High Court has directed the Central Board of Direct Taxes (CBDT) to immediately issue a notification for extending the deadline for the revised and belated ITR filing to January 15, 2025. This deadline is being extended for those taxpayers who are eligible to claim section 87A tax rebate. Do note this is only an interim relief as the final judgement will be pronounced on January 9, 2025.
What did Bombay High Court do
In an order dated December 20, 2024, Bombay High Court said: "…By way of interim relief, the respondent, Central Board of Direct Taxes is hereby directed to forthwith issue requisite notification under Section 119 of the Act extending the due date for e-filing of the income-tax returns in relation to the assessees who are required to file a return of income by December 31, 2024, at least to January 15, 2025. This extension is to ensure that all taxpayers eligible for the rebate under Section 87A are afforded the opportunity to exercise their statutory rights without facing procedural impediments."What is the section 87A tax rebate issue?
Anand Bathiya, president, Bombay Chartered Accountants' Society (BCAS), said to ET Wealth Online, "Post 5th July 2024 the income tax return (ITR) filing utilities are not allowing the rebate under section 87A for various special rate incomes, including short-term capital gains on equity shares or equity oriented mutual funds taxable at 15% under Section 111A."According to the Bombay High Court order, The Chamber of Tax Consultants, said, "The respondents have unilaterally disabled assessees from claiming rebate under Section 87A after 5 July 2024 by modifying the utility software for filing income-tax returns. As a result, if the returns are filed by the assessees using the software of the respondents after 5 July 2024, they are unable to claim the rebate."
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The Finance Act, 2019 increased the threshold for claiming tax rebate under section 87A to Rs 12,500 if income is Rs 5 lakh or below under the old tax regime. Under the new tax regime, the tax rebate amount is Rs 25,000 if the income is Rs 7 lakh or below.
"The principle behind Section 87A has always been to ensure that taxpayers in lower-income brackets are not burdened unduly, and the arbitrary disabling of the rebate through the modification of utility software undermines this legislative intent," said The Chamber of Tax Consultants.
No income tax rebate u/s 87A despite total income below Rs 7 lakh in these cases.
The problem was with the tax department arbitrarily changing utility software logic mid-way
The Chamber of Tax Consultants argued before the Bombay High Court that the primary problem was the tax department modifying the logic of its own ITR filing utility software for AY 2024-25 (FY 2023-24) midway through the assessment year."The returns of income are mandatorily required to be filed online. CBDT annually releases utilities for filing income tax returns online. These utilities are generally released before the end of the financial year to ensure taxpayers have sufficient time to comply with their obligations. However, the modification of the utility for Assessment Year 2024-2025 midway through the assessment year has caused undue hardship to taxpayers, particularly those relying on the rebate under Section 87A," said The Chamber of Tax Consultants.
Bombay High CourtSource: Bombay High Court orderAll Gujarat Federation of Tax Consultants and Income Tax Bar Association in a joint representation dated July 15, 2024 said that before July 5, 2024 the same income tax utility and calculator were allowing rebate under section 87A against the tax on short term capital gain on shares under section 111A and other special rate incomes other than long term capital gain under section 112A where such rebate is specifically barred by the sub-section (6) of the section 112A itself.
No tax rebate u/s 87A allowed on short term capital gains from equities despite being eligible, what experts demand from govt
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This story originally appeared on: India Times - Author:Faqs of Insurances
