HC: I-T filing system shouldn’t hinder taxpayers’ rebate claims | Mumbai News

MUMBAI: Scores of taxpayers, including the salaried, who were unable to claim an income-tax (I-T) rebate in their tax returns for the assessment year 2024-25 (ended March 31, 2024), due to software changes in the filing platform (utility) made by the I-T department, stand to benefit from a final Bombay High Court order passed on Friday.
Under Section 87A, a taxpayer with a total income of up to Rs 5 lakh under the old regime and up to Rs 7 lakh under the new was entitled to a tax rebate of Rs 12,500 and Rs 25,000 respectively. The I-T department’s updated filing utility, though, allegedly disabled this rebate for those filing under the new regime in specific cases, such as when tax was levied at special rates. For instance, tax at 15% on short-term capital gains or 10% on long-term capital gains on sale of equity shares or equity-oriented mutual funds.
In response to a public interest litigation (PIL) filed by the Chamber of Tax Consultants (CTC), HC held the utility should not prevent the taxpayers from making rebate claims, as the correctness of such claims can be examined during the assessment process. The CTC had contended that changes made to the tax filing utility after July 5, 2024, arbitrarily prevented taxpayers from claiming this rebate.
HC, though, did not adjudicate on the eligibility of the claims, leaving it to the tax authorities under the Act to decide during the assessment process.
In this context, Ketan Vajani, chartered accountant and former president of CTC, said, “If the I-T department denies the rebate under Section 87A, the taxpayer will be required to follow the appeal mechanism as provided in the I-T Act. The fundamental question of allowing a taxpayer to raise a claim has been answered by the high court in favour of the taxpayers. Hopefully the I-T department will keep this in mind while designing future forms and utilities.”
TOI had earlier reported on the interim order, following which the Central Board of Direct Taxes extended the last date for filing a revised return to claim the rebate and get a tax refund to Jan 15.