The Mumbai High Court has postponed the last date to file income tax from December 31, 2024, to January 15, 2025. The delay is to ensure the citizens get maximum benefits under Section 87A.

What Did The High Court Say?

In a case titled, The Chamber of Tax Consultants through it’s President Vijay Bhatt … Petitioner V/s. Director General of Income Tax (Systems) & Ors, the Mumbai High Court said, “Central Board of Direct Taxes is hereby directed to forthwith issue requisite notification under Section 119 of the Act extending the due date for e-filing of the income-tax returns in relation to the assessees who are required to file a return of income by December 31, 2024, at least to January 15, 2025. This extension is to ensure that all taxpayers eligible for the rebate under Section 87A are afforded the opportunity to exercise their statutory rights without facing procedural impediments.”

The Chamber of Tax Consultants had filed the present PIL petition seeking a direction to the respondents to modify the system developed and put in place by the Tax Department for filing income-tax returns for Assessment Year 2024-2025
so as to allow the assessees at large to take complete benefit of the rebate available under Section 87A of the Income Tax Act, 1961.

What Is The Section 87A Issue?

The rebate under Section 87A is available to individual taxpayers whose income does not exceed the specified threshold. The limit is Rs. 7 lakh under the new tax regime and Rs. 5 lakh under the old regime. If your income falls within these thresholds, your tax liability will be reduced to zero, says ClearTax.

In simpler terms, an individual with taxable income up to Rs 7 Lakhs can avail of a rebate that is lower than the payable income tax on total income, or Rs 25K, whichever is lower.

“The respondents have unilaterally disabled assessees from claiming rebate under Section 87A after 5 July 2024 by modifying the utility software for filing income-tax returns. As a result, if the returns are filed by the assessees using the software of the respondents after 5 July 2024, they are unable to claim the rebate.” The Mumbai HC Noted.

It seems like the extension is issued to solve the section 87A issue and the associated technical issues around it.