Income Tax Department Tightens Rules for Claiming Refunds and Condonation of Delays
The Central Board of Direct Taxes (CBDT) has introduced major updates to the process of claiming tax refunds and seeking condonation of delays in filing Income Tax Returns (ITRs). Starting October 1, 2024, these new rules aim to simplify tax administration and enhance compliance. Here’s a detailed look at the changes and their implications.
Reduced Time Limit for Refund Claims
The government has reduced the time frame for claiming tax refunds and filing condonation requests. Taxpayers now have five years (instead of six) from the end of the financial year in which the ITR was due to take necessary action.
Implications for Taxpayers
- Stricter Deadlines: Taxpayers must act promptly to avoid losing refund opportunities.
- Improved Record Management: Accurate and comprehensive records are essential for timely compliance.
- Increased Reliance on Tax Advisors: Professional guidance can help ensure adherence to new timelines.
These changes highlight the importance of staying proactive in tax-related matters.
Condonation of Delay: Key Scenarios
Taxpayers can request condonation of delays in the following situations:
- Late Electronic Verification
Individuals who fail to verify their ITR within 30 days of e-filing can submit a condonation request, provided they have valid reasons. - Late Filing of ITR
Missing the standard filing deadline (usually July 31) allows taxpayers to seek condonation. However, late fees may apply based on the delay’s duration and the taxpayer’s income level.
How to Apply
Applications must be submitted through the Income Tax e-filing portal. Tax authorities evaluate each case and decide whether to grant approval.
Special Provisions
- Court-Related Refund Claims
Taxpayers involved in court cases receive additional time. The five-year limit excludes the litigation period, and they get six months after the court’s decision to file condonation applications. - Supplementary Refund Claims
Taxpayers can apply for additional refunds post-assessment if they meet all conditions. However, the government does not pay interest on these delayed claims.
Guidelines for Tax Authorities
The CBDT has issued instructions under Section 119(2)(b) of the Income-tax Act, 1961, for managing late filings and refund claims. Different levels of tax officers handle cases based on the claim amount, ensuring efficient processing.
Expert Opinions
Siddharth Maurya, Founder & MD, Vibhavangal Anukulakara Private Limited
“Taxpayers need to act swiftly and maintain accurate records to meet the revised timelines. Timely compliance is now critical.”
Gaurav Singh Parmar, Associate Director, Fincorpit Consulting
“The government’s commitment to improving tax efficiency is evident. Businesses must adjust their processes to stay compliant.”
Abhishek Soni, CEO & Co-Founder, Tax2win
“While the new framework simplifies refunds, it demands greater vigilance from taxpayers. Effective record-keeping is a must.”
Steps Taxpayers Should Take
To adapt to these changes, taxpayers should:
- File Returns on Time: Avoid missing deadlines to secure entitled refunds and benefits.
- Engage Tax Professionals: Work with experts to ensure compliance with the updated rules.
- Stay Informed: Regularly monitor updates on tax regulations to remain compliant and prepared.
By implementing these measures, taxpayers can navigate the revised rules effectively and minimize risks.
