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Without going into the sections, proviso and the clause 2, 20 and 24 of the Finance Bill 2025, some situations are rendered here for the applicability and availability of the Sec 87A rebate both under the Old tax regime and the New Tax regime.

Rebate Under Section 87A of Income Tax Act 1961

Important Pointers for claiming rebate u/s 87A:

A. UNDER THE OLD REGIME:

1. Old Regime is still beneficial since the rebate u/s 87A is available and useful in the following circumstance:

For tax payers who do not have any other income other than capital gains calculated under special rates, or the tax payers having a mix of slab rate incomes and special rate incomes, can still opt for old regime in FY 2025-26

Section 87A rebate applicable for Capital Gains Post-Budget 2025

i) if they fall under the limits and

ii) if beneficial for them, as they can avail the rebate u/s 87A under old regime as before.

2. There is no change in the scope of rebate for those who file under the old regime. The rebate is applicable for all types of incomes, except LTCG from equity, for all years. The rebate is not applicable for special rate income being LTCG equity income.

3. The rebate can be availed against STCG equity incomes.

4. The rebate can be claimed against LTCG debt funds having both slab tax rate income and special tax rate income.

5. The rebate can be claimed against STCG debt funds income too.

6. The rebate can be claimed against Other LTCG slab tax rate incomes, Other LTCG special tax rate incomes, Other STCG slab tax rate incomes and Other special tax rate incomes.

B. UNDER THE NEW TAX REGIME:

1. The rebate in case of new regime is applicable only to the tax computed as per slab rates under section 115BAC(1A). This amendment is applicable only from FY 2025-26 (AY 2026-27).

2. There is no change in the scope of rebate for those who file under the new regime in FY 2024-25 (AY 2025-26). The rebate is applicable for all types of incomes except LTCG from equity.

3. For new regime from FY 2025-26 (AY 2026-27) onwards, the rebate is applicable only for tax computed as per slabs and not for any special rate taxes.

4. The rebate is not applicable on LTCG Equity incomes.

5. The rebate is not applicable on STCG equity incomes.

6. The rebate is available on LTCG debt funds having slab tax rates but not available on LTCG debt funds with special tax rate incomes.

7. The rebate is available on STCG debt fund incomes.

8. The rebate is available on Other LTCG slab tax rate incomes but not on LTCG special tax rate incomes.

9. The rebate is available on Other STCG slab rate incomes but not on special rate incomes.

C. Calculation of threshold limits:

An important point is that to calculate the applicability threshold of the rebate, the total income including all special rate incomes will be considered.

While every care has been taken to ensure the accuracy/ authenticity of the above, the readers are advised to recheck/reconfirm the same from the original sources/ relevant departments. It is based upon relevant law and/or facts available at that point of time and prepared with due accuracy & reliability. By the use of the said information, you agree that the company is not responsible or liable in any manner for the authenticity, accuracy, completeness, errors or any kind of omissions in this piece of information for any action taken thereof. This is not any kind of advertisement or solicitation of work by a professional. The company shall in no way be responsible for any loss or damage suffered to any person on account of the same.

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One Comment

  1. Vasudev Agrawal says:

    As mention in this post, but actually not allowed 87a rebate for FY23_24 and so as will be for FY24_25 in case of income from STCG , where return file under new rigim with total income below 7lakh. still this issue persists after long legal battle and part judicial order on it, and demand notices being issued after reprocessing the returns for this. matter. any solution please

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