CBDT Issues New Guidelines for Handling Delayed Income Tax Refund Claims: Key Points for Taxpayers

The Central Board of Direct Taxes (CBDT) has introduced new guidelines for the condonation of delay in filing income tax returns (ITRs) that claim refunds or carry forward losses. These guidelines replace all previous instructions on the subject and aim to streamline the process. Here’s what taxpayers should know:

Authority to Approve Claims Based on Amounts:

1. Claims up to ₹1 crore: Decided by Principal Commissioners of Income Tax (Pr. CsIT).
2. Claims between ₹1 crore and ₹3 crore: Handled by Chief Commissioners of Income Tax (CCsIT).
3. Claims exceeding ₹3 crore: Managed by Principal Chief Commissioners of Income Tax (Pr. CCsIT).
4. Bengaluru’s Central Processing Centre (CPC) is authorized to process delayed verification of ITR-V forms.

Time Limits for Filing Condonation Applications:

Taxpayers must submit condonation applications within five years from the end of the relevant assessment year.

This rule applies to claims filed after October 1, 2024.

Authorities aim to process applications within six months of submission.

Conditions for Approval:

The taxpayer must provide a genuine reason for the delay, demonstrating that it caused hardship.

Authorities may instruct a local tax officer to investigate the reasons for the delay.

Special Cases:

For refunds resulting from a court order, the five-year limit does not include the period when the case was pending in court.

Taxpayers have six months from the date of the court order to apply for condonation.

Supplementary refund claims (additional refunds post-assessment) may also be considered under the new rules.

No Interest on Late Refund Claims:

No interest will be paid on refunds for delayed claims.

These updated guidelines are crucial for taxpayers seeking refunds or carrying forward losses, as they provide a clear framework for handling delayed filings.

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