Income Tax dept updates ITR Forms 2 and 3 for claiming 87A tax rebate

It is important to note that eligible taxpayers who were previously unable to claim the Section 87A tax rebate can now do so by filing a revised or belated income tax return (ITR)

Taxpayers, who are eligible for the Section 87A tax rebate but were unable to claim it after July 5, 2024, can now exercise the option to update the rebate. The Income Tax Department has updated the Excel utilities for ITR Forms 2 and 3, allowing taxpayers to claim the rebate for Assessment Year (AY) 2024-25. The department also announced that the HTML utilities will be released soon.

 

“The updated excel utilities for ITR Forms 2 and 3 to exercise the option to update rebate under section 87A for AY 2024-25 are now available. The HTML utilities will be made available shortly,” according to the Income Tax Department’s website.

 

 

Ritika Nayyar, partner, Singhania & Co. explains how to claim Section 87A tax rebate before deadline ends?

 

Assessees may try either filing an updated/revised return and manually punching in the amount of claim under section 87A in the earmarked cell in the excel form and then validating the same.

 

“All updates to utility/softwares should happen parallelly for each process to run smoothly and not at lag or one after another. Else, there will always be issues at some point in the system which will primarily create hurdles in filing and thereafter in processing,” Nayyar said.

 

Previously, the Income Tax Utility Software facilitated the filing of Income Tax Returns (ITRs) with applicable rebates. However, after July 5, 2024, a controversy arose when the income tax department altered the software's schema. As a result, individuals who had claimed tax rebates while filing their ITRs began receiving intimation notices, demanding payment of the rebate amount as tax dues.

 

In response, the Bombay High Court intervened, instructing the tax department to extend the deadline for filing revised and belated ITRs to January 15, 2025. This extension allows taxpayers to properly claim the 87A tax rebate.

 

As the court's final order approaches on January 9, 2025, experts suggest it is crucial for the Income Tax Department to thoroughly address these operational challenges. This involves synchronising the software's processing logic with the updated utility forms and ensuring smooth claim processing for eligible taxpayers.