The Bombay High Court has adjourned the final disposal of PIL challenging denial of Rebate under Section 87A of the Income Tax Act For A.Y. 2024-25 till 10th January 2025 (tomorrow).

A Public Interest Litigation (PIL) filed by The Chamber of Tax Consultants, challenged disabling of Section 87A rebate claims through the filing utility. 

The petitioner contended that changes made to the tax filing utility after July 5, 2024, arbitrarily prevented taxpayers from claiming the rebate under Section 87A. The rebate, introduced to provide tax relief to individuals with an income below a specified threshold, has long been considered a cornerstone of equitable taxation.

Under section 87A, a taxpayer with a total income of up to Rs. 5 lakhs under the old regime and up to Rs. 7 lakh under the new regime was entitled to a tax rebate of Rs. 12,500 and Rs. 25,000 respectively. 

However, the Income Tax department’s updated filing utility allegedly disabled this rebate for those filing under the new regime in specific cases, such as when tax is levied at special rates, eg: tax at 15% on short-term capital gains or 10% on long-term capital gains on sale of on equity shares or equity-oriented mutual funds.

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The bench of Chief Justice Devendra Kumar Upadhyaya and Justice Amit Borkar, made critical observations regarding the issue. It noted that procedural changes, such as those in the tax filing utility, cannot override statutory rights. The rebate under Section 87A is inherently linked to a taxpayer’s total income and should be accessible to all eligible taxpayers. 

The high court stated that the tax department must act as facilitators, ensuring compliance with legislative intent rather than creating procedural impediments.

The court observed that Section 87A rebate is a substantive right tied to total income and cannot be denied by procedural changes.

Court has directed CBDT to extend ITR filing deadline from 31st Dec 2024 to at least 15th Jan 2025 for belated/revised returns.

The court listed for final disposal on 9th Jan 2025.

The hearing for Final Disposal of the case has been adjourned to 10th Jan 25, as counsel for both the parties agreed to the same.

Case Details

Case Title:  The Chamber of Tax Consultants vs. DGIT (Systems) & Ors

Case No.: PIL (L) No. 32465 of 2024