In the 2023 budget, Finance Minister Nirmala Sitharaman announced no income tax for those earning up to ₹7 lakh under the new tax regime, with an increased rebate limit under Section 87A. This makes taxpayers with incomes up to ₹7 lakh eligible for a rebate capped at ₹25,000.
For example, if someone earns ₹40,000 per month, ₹1.20 lakh from short-term capital gains, and ₹1 lakh from long-term capital gains, their total taxable income would be ₹7 lakh. They would receive rebates on salary and STCG income but still pay ₹10,000 in tax on LTCG income.
Recently, after 5th July taxpayers have faced significant issues with the Income Tax Department's ITR utility, when the e-filing portal started calculating rebates under section 87A incorrectly, particularly affecting the calculation of Long-Term Capital Gains (LTCG) and Short-Term Capital Gains (STCG) from shares. These technical glitches have resulted in incorrect tax computations, causing delays and errors in tax filings.
Major Issues and Impact
- Auto-population Errors: The utility has struggled with correctly auto-populating LTCG and STCG details, leading to discrepancies in taxable income calculations.
- Tax Computation Errors: Incorrect computation can result in overpayment or underpayment of taxes, causing financial and legal complications for taxpayers.
- Submission Issues: Taxpayers have experienced difficulties submitting their ITR forms, requiring manual adjustments which are time-consuming and error prone.
Government and Infosys' Response
The Central Board of Direct Taxes (CBDT) and Infosys, the portal vendor, are working on resolving these issues. Finance Minister Nirmala Sitharaman has directed urgent fixes to ensure smooth operation as the filing deadline nears. Enhanced quality checks and rigorous testing procedures are expected to be implemented to prevent future glitches.
Recommendations for Taxpayers
Taxpayers are advised to:
· Stay updated with announcements from the IT Department.
· Consider professional tax services to ensure accurate filings and compliance.
The government aims to mitigate these issues promptly, ensuring a smoother experience for taxpayers in the future.
