Finance Ministry Issues New Standards for Handling Delayed Tax Refund Requests | Personal Finance

On By Rgal Nv

4 minutes of reading Last update: October 2, 2024 | 8:10 p.m. STI

The Ministry of Finance has published new guidelines for processing overdue tax refund requests and loss carryforward requests. The new guidelines released on Tuesday increase the limit on the tax refund claim amount in case of delay, which will help taxpayers who failed to file an ITR despite having a tax refund due to them.



“…this circular is issued to deal with requests for excuse for delay in filing returns seeking reimbursement and returns seeking carryover of loss and its compensation, containing comprehensive guidelines on conditions of excuse and the procedures to be followed in deciding these matters,” the Central Board of Direct Taxes (CBDT) under the Ministry of Finance said in a circular.

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“This improvement in jurisdictional boundaries will significantly streamline the process of excusing delays for tax refunds, allowing taxpayers to receive their refunds more quickly and with fewer bureaucratic hurdles, particularly for higher value claims. This promotes trust and eases compliance for taxpayers,” said Amit Bansal, partner at Singhania & Co.


Key points:

Tiered authority structure: The circular establishes a three-tier system for processing claims based on the amount of claims:

Claim amount: less than or equal to Rs 1 crore

– Principal Commissioners of Income Tax/Commissioners of Income Tax (Pr. CsIT/CsIT) will have the power to accept or reject applications if the amount claimed is less than or equal to Rs 1 crore for one year of assessment.

Amount of claim: between Rs 1 and 3 crore

The Chief Commissioners of Income Tax (CCsIT) will have the power to accept or reject applications if the amount claimed is Rs 1 crore but does not exceed Rs 3 crore.

Claim amount: more than Rs 3 crore

The Principal Chief Commissioners of Income Tax (Pr. CCsIT) will have the power to accept or reject applications if the amount claimed is more than Rs 3 crore.

Time limit: A strict time limit of five years from the end of the assessment year has been imposed for filing pardon applications. This rule applies to all applications filed on or after October 1, 2024.

Processing time: Authorities are asked to process requests within six months of receipt.

Judicial requests: for reimbursement requests resulting from a judicial decision, the duration of the legal procedure is excluded from the five-year period. Applications must be filed within six months of the court’s decision or the end of the fiscal year, whichever is later.

Supplementary Requests: A late request for supplementary request for reimbursement (request for additional amount of reimbursement after the end of the assessment for the same year) may be admitted for forgiveness provided that the other conditions mentioned above are met. The powers of acceptance/rejection within the monetary limits delegated to Pr.CCsIT/CCsIT/Pr.CsIT/CsIT in case of returns with request for refund and additional request for refund would be subject to the following additional conditions:

I. The income of the assessee is not available to any other person under any provision of the Act.

ii. No interest will be admissible on a late reimbursement request.

iii. The refund is a result of excess tax deducted/collected at source and/or advance payment of excess tax and/or excess payment of self-assessment tax in accordance with the provisions of the law.

No interest on late refund requests: The circular clarifies that no interest will be admissible on late refund requests.

Extension of Verification: It is also provided that the Commissioner of Income Tax, Central Processing Center (CPC), Bengaluru, may accept or reject petitions under Section 119(2)(b) of the Act seeking excuse of delay in verification of return of income by sending the ITR-V to the Centralized Processing Cell (CPC), Bengaluru within the prescribed period.

The new guidelines aim to streamline the process of processing overdue tax refund requests and loss carryforward requests, thereby providing greater clarity to taxpayers and tax authorities.

First publication: October 2, 2024 | 8:10 p.m. STI