Archive · 3 Jan 2026
BCCI Seeks Budget 2026 Relief for Small Taxpayers
The Bombay Chamber of Commerce and Industry (BCCI) is asking the government to make changes to the tax laws in the upcoming Budget 2026.
Currently, small taxpayers who earn money from selling shares or mutual funds don't get a tax rebate under Section 87A, even if their total income is below a certain limit.
The BCCI wants the government to change this so that these taxpayers can still get the rebate.
They also suggest increasing the income limit for the rebate and the maximum amount of the rebate.
This would help reduce the tax burden on small taxpayers who earn capital gains from their investments.
BCCI urges the Finance Ministry to amend Sections 111A and 112 of the Income Tax Act to allow small taxpayers to claim the Section 87A rebate on their other income, even if their total income includes capital gains.
Currently, the Section 87A rebate is not available on tax payable on long-term capital gains from listed equity shares, equity-oriented mutual funds, and units of business trusts covered under Section 112A.
The BCCI proposes raising the income threshold for the rebate under Section 87A in the new tax regime from Rs 7 lakh to Rs 12 lakh and increasing the maximum rebate from Rs 25,000 to Rs 60,000.
Recent hikes in capital gains tax rates under Sections 112 and 111A have increased the tax burden on individuals with taxable income between Rs 2.5 lakh and Rs 7 lakh who earn capital gains.
The BCCI argues that taxpayers are unfairly penalized for one-off capital gains transactions and suggests rationalizing the provision to ensure the rebate does not exceed the tax payable under Section 115BAC.
- Who
- Bombay Chamber of Commerce and Industry (BCCI)
- What
- Proposed amendments to Sections 111A and 112 of the Income Tax Act to allow small taxpayers to claim the Section 87A rebate on their other income, even if their total income includes capital gains.
- When
- Ahead of the Union Budget 2026.
- Where
- India
- Why
- To address the issue of small taxpayers missing out on the tax rebate under Section 87A when their total income includes capital gains from equity mutual funds or shares, or capital gains from other assets.
- Section 87A Rebate
- Tax rebate for resident individuals with taxable income below a specified threshold.
- Current Rebate Limit (New Tax Regime)
- Rs 25,000 for FY 2024–25, Rs 60,000 for FY 2025–26.
- Income Threshold (New Tax Regime)
- Rs 7 lakh for FY 2024–25, Rs 12 lakh for FY 2025–26.
- Section 111A
- Governs short-term capital gains from equity shares and mutual funds.
- Section 112
- Governs long-term capital gains from other capital assets.
- BCCI Proposal
- Amend Sections 111A and 112 to align with Section 112A(6).
- Proposed Rebate Increase
- Raise income threshold to Rs 12 lakh and maximum rebate to Rs 60,000.