Tax Rebate u/s 87A: The Central Board of Direct Taxes (CBDT), the country’s apex body, has reiterated that tax rebate under Section 87A of the Income-tax Act, 1961, will not be allowed on special-rate incomes like short-term capital gains (STCG). The clarification comes after several taxpayers claimed the rebate even on STCG in FY 2023-24, which the income tax department rejected.

Rejecting the rebate, the I-T department has issued a demand to pay the taxes before December 31, 2025. It also includes those who had, inadvertently, been extended the rebate earlier.

“It is noticed that in certain cases, the returns had already been processed and rebate was allowed under section 87A of the Act on incomes chargeable to tax at special rates. In such cases, rectifications have to be carried out

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