Rebate under section 87A applicability to income taxed at special rates affirmed; rebate granted and tax recomputed

Rebate under section 87A applies to the tax liability computed on total income including amounts taxed at special rates; the Tribunal followed a prior decision holding that the rebate makes no distinction between income taxed at normal rates and income taxed at special rates, including long term capital gains. Consequentially the taxpayer was held entitled to the rebate and the assessing officer was directed to allow the claimed rebate and recompute tax liability for the assessment year.

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Issues: Whether an individual whose total income for A.Y. 2024-25 does not exceed Rs. 7,00,000 but includes income chargeable at special rates is entitled to rebate under Section 87A of the Income-tax Act, 1961.

Analysis: Section 87A grants a rebate where the total income does not exceed the specified threshold and contains no express exclusion for incomes taxed at special rates. The proviso referencing section 115BAC(1A) and amendments proposed prospectively do not operate to deny the rebate for A.Y. 2024-25. The presence of an express exclusion in Section 112A(6) for a specific category of capital gains demonstrates that the legislature uses explicit language when intending to restrict rebate availability. An explanatory memorandum or subsequent prospective amendments cannot override the unambiguous statutory text applicable to the assessment year in question. Coordinate tribunal decisions applying these principles support allowing the rebate where the statutory threshold is satisfied despite inclusion of special-rate income.

Conclusion: Rebate under Section 87A is available for the assessment year 2024-25 where total income does not exceed Rs. 7,00,000 even if the total income includes amounts chargeable at special rates; the claim of rebate of Rs. 25,000 is allowed.

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