In a significant ruling, the Bombay High Court has instructed the Central Board of Direct Taxes (CBDT) to extend the deadline for filing belated and revised Income Tax Returns (ITR) for the Assessment Year (A.Y.) 2024-25 from December 31, 2024, to at least January 15, 2025. This decision followed a Public Interest Litigation (PIL) filed by the Chamber of Tax Consultants, which highlighted issues caused by procedural changes in the ITR filing software.

The PIL challenged the exclusion of taxpayers from claiming the Section 87A rebate under the new tax regime, caused by a software update on July 5, 2024. This update unexpectedly prevented taxpayers from applying for the rebate, which is designed to offer significant tax relief based on total income.

The court noted that the Section 87A rebate, which provides tax relief to individual taxpayers with total taxable income up to Rs 7 lakh (under the new tax regime) or Rs 5 lakh (under the old tax regime), is a fundamental right. It cannot be denied simply due to changes in procedural or technological aspects.

Section 87A allows a rebate of up to Rs 25,000 under the new tax regime and Rs 12,500 under the old tax regime, effectively reducing the tax liability to zero for many taxpayers.

Currently, the deadline for filing belated and revised returns for A.Y. 2024-25 is December 31, 2024. A belated return, filed under Section 139(4) of the Income Tax Act, carries a penalty of Rs 5,000, which is reduced to Rs 1,000 for taxpayers with taxable income below Rs 5 lakh. No penalty is imposed if the income is below the basic exemption limit of Rs 3 lakh. Failing to meet the deadline can result in the forfeiture of claims for refunds, deductions, or tax credits. After the deadline, taxpayers can only file an updated return, which may involve additional conditions, including potential tax liabilities.

The court's decision to extend the deadline aims to help taxpayers who faced difficulties due to technical issues, ensuring they don’t miss out on benefits or face unnecessary penalties. This extension gives taxpayers extra time to file their belated and revised returns without risking critical claims or incurring penalties.