ITR Filing 2025: Can you claim Section 87A rebate on LTCG, STCG if your total income is below ₹7 Lakh?

Yes, you can technically claim the rebate under Section 87A, even if your income includes long-term capital gains (LTCG) and short-term capital gains (STCG) from equity while filing your income tax return for FY 2024-25, according to recent ITAT orders.

However, tax experts say that it may not be possible for taxpayers to claim this rebate as the ITR utilities currently do not have this provision. Let's understand the issue in detail:

It is possible to claim the rebate under Section 87A against tax payable on capital gains based on two recent Income Tax Appellate Tribunal (ITAT) rulings for AY2025-26.

"The ITAT Chennai clarified that Section 87A does not exclude any category of income from this benefit. So, as long as your total income is within ₹7 lakh, you won’t have to pay any income tax—even if a part of your income comes from capital gains,” said Abhishek Soni, CEO and Co-founder of Tax2win.

In his decision, Shukla referred to a similar ruling by the Bombay High Court in the Rajiv G Shah case, which supported allowing the rebate.

"However, the ITR utility does not permit this claim due to which it would practically not be possible to claim this benefit at the time of filing the tax return," said Alok Agrawal, Partner, Deloitte India

Also, given the potential for litigation, taxpayers may consider forgoing the rebate after evaluating the cost-benefit perspective, added Alok Agrawal.

In its August 20, 2025 order ,ITAT Chennai clarified how the Section 87A rebate should be applied.

The tribunal stated that when calculating whether a taxpayer qualifies for the rebate, special rate incomes like LTCG should be excluded while computing total income.

However, many taxpayers are being denied the 87A rebate in FY 2023-24.

"Many taxpayers are being denied the 87A rebate in FY 2023-24 and FY 2024-25, if they have LTCG or STCG income," CA Abhas Halakhandi highlighted on social media platform X on August 5.

Only resident individuals are eligible to avail rebate under this section.

Section 87A: How much is the rebate allowed under new tax regime.

For FY 2024-25, if an individual's total taxable income is up to ₹7 lakh, he/she will be eligible for rebate up to ₹25,000.

Section 87A: How much is the rebate allowed under old tax regime

A resident individual is having a total taxable income of less than ₹5 Lakh, up to ₹ 12,500 rebate can be availed.

But the rebate allowed shall not exceed the total tax payable before cess in any case.

• Section 87A rebate can be claimed against tax liabilities on:

• Regular income that is taxed as per the normal income tax slabs.

• Long-term capital gains taxed under Section 112 (gains from selling capital assets other than listed shares and equity mutual funds).

• Short-term capital gains from listed shares and equity mutual funds, which are taxed at a flat 15% rate under Section 111A.