ITAT Mumbai Allows Section 87A Rebate on STCG

The Income Tax Appellate Tribunal (ITAT) in Mumbai has ruled that a taxpayer can claim the Section 87A rebate on short-term capital gains (STCG) from equity shares.

The taxpayer, who earned a total income of ₹5.28 lakh, including ₹1.42 lakh from selling equity shares, was eligible for the rebate because her total income was below ₹7 lakh.

The tax department initially rejected the claim, arguing that the rebate does not apply to STCG, which is taxed at special rates.

However, the ITAT found that the law for the relevant assessment year did not explicitly prohibit the rebate on STCG.

The Tribunal also noted that a later amendment to the law, which restricts the rebate on certain special-rate incomes, does not apply to earlier years.

Therefore, the ITAT allowed the taxpayer's appeal and directed the tax authorities to provide the rebate and recalculate her tax liability.