ITR Filing: Income Tax Department Tightens Deadlines For Refund Claims

The Income Tax Department has made substantial alterations to the refund claim process with a view to eliminating the time available for a taxpayer to file a condonation of delay. Under Section 119(2)(b) of the Income-tax Act, 1961, Central Board of Direct Taxes (CBDT) circular dated October 1, 2024, amended the rules for processing Income Tax Returns (ITRs) delayed with regard to refund or carry forward of losses. These amendments indicate the need for proper and timely tax filing.

Major Changes in Time Limit

The new circular reduced the deadline from six years to five years from the end of the fiscal year in which ITR was due, thereby reducing the submission time on taxpayers' applications for condonation of delay by one year. Applications must be processed within six months of the close of the month of receipt for faster disposal.

Scenarios for Delayed Condonation

Taxpayers can request condonation in two main situations:

1. Late Electronic Verification: If you fail to verify your ITR within 30 days of filing it electronically, you can request condonation, provided you have valid reasons for the delay.

2. Late filing of ITR: In case of missing the July 31 deadline, condonation is granted subject to a late fee, depending upon the justification provided for the delay.

Special Provisions for Refund Claims

Taxpayers need to lodge their claims for condonation through the e-filing portal, and tax authorities can grant or deny approval.

1. Refund related to proceedings before courts: Court-related time would not be included in the five-year period. Condonation for submitting applications regarding court-related refunds requires to be made within six months of the order of the court or the end of the fiscal year whichever is earlier.

2. Supplemental Refund Claims: Taxpayers can file supplemental refunds after an assessment, subject to specific conditions. The refund will not earn interest; the income must not have been taxable in somebody else's name.

Why It Matters

These new guidelines emphasize the importance of taxpayers being alert and filing correct tax returns before the deadline. For applicants who have unclaimed refund balances or losses to be carried forward for adjustment against the taxes payable in future years, the shorter timeframe hurts their plight. Taxpayers will then be denied benefits merely because they did not act quickly enough under the new deadlines. The CBDT urges taxpayers to remain vigilant and file their returns within the stricter timelines prescribed by the Board.