On January 16, 2026, the Income Tax Appellate tribunal (ITAT) Indore granted a full Section 87A tax rebate on both short term and long term capital gains from the sale of equity shares. This decision settled the long- standing dispute about whether Section 87A tax rebates could be applied to STCG and LTCG from equities. To give you some context on the Section 87A dispute, it all began on July 5, 2024. On that date, the Income Tax Department updated its ITR processing utility software and restricted the Section 87A tax rebate on special rate incomes like Short-Term Capital Gains (STCG) under the new tax regime. This sparked controversy and led to legal battles. On January 24, 2025, the Bombay High Court ordered the income tax department to allow Section 87A tax rebate claims on special rate incomes like capital gains, stating that any disputes would be resolved by judicial forums like ITAT and the courts.