Section 87A

Section 87A — the law in short

What the courts have decided on section 87A, in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• Ankit Kabra v ITO ITATHelps departmentNo later treatment found
  My client's total income is under Rs 7 lakh but it includes a small crypto gain, and the CPC has knocked out his Rs 25,000 rebate under section 87A. Is that right?
  On this decision, yes. The Surat Bench held that where the tax on VDA income is computed under s.115BBH, the case is not covered by s.115BAC and the rebate under the proviso to s.87A — which is expressed to apply where the total income is chargeable to tax under s.115BAC(1A) — is therefore not available against it. The appeal was dismissed and the disallowance of the Rs 25,000 rebate for AY 2024-25 was upheld.
• Statutory position — section 112A: the long-term rate and the exempt slice, before and after 23 July 2024 CBDT Circulars & InstructionsCuts both ways
  My client sold listed equity shares twice in FY 2024-25 — once in June 2024 and once in September 2024. What rate and what exempt threshold apply to each lot?
  Two different rates apply inside the same previous year, but only ONE exempt slice. For a transfer BEFORE 23 July 2024 the section 112A rate is ten per cent; for a transfer ON OR AFTER 23 July 2024 it is twelve and a half per cent. The exempt slice is one lakh twenty-five thousand rupees for the whole of the previous year — the proviso to section 112A(2)(i) says in terms that the limit applies on the AGGREGATE of the long-term capital gains under both sub-clauses — so it is not split between the two rate blocks and the pre-23-July lot does not get a separate one lakh rupee slice. The one lakh rupee figure governs transfers up to 31 March 2024 only. Both changes were made by the Finance (No. 2) Act 2024 with effect from 23 July 2024.
• Statutory position — s.194P: the specified senior citizen, the declaration, and relief from filing CBDT Circulars & InstructionsCuts both waysNo later treatment found
  My client is 78, has only pension and interest from the same bank, and does not want to file a return. Does s.194P get him out of filing, and what does the bank need from him?
  Yes, but only if every condition is met, and the relief is a consequence of the bank's deduction and not of the client's age. Section 194P(2) provides that s.139 shall not apply to a specified senior citizen for the assessment year relevant to the previous year in which tax has been deducted under sub-section (1) — so if the bank does not compute and deduct, the return obligation remains. Sub-section (1) requires a 'specified bank' to compute the total income after giving effect to Chapter VI-A deductions and the s.87A rebate and to deduct tax on that total income at the rates in force, and the Explanation confines a 'specified senior citizen' to a resident individual aged seventy-five or more at any time during the previous year, whose income consists of pension and no other income except interest received or receivable from an account maintained by him in the SAME specified bank in which he receives his pension, and who has furnished the prescribed declaration to that bank.

Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.