The recently introduced Income Tax Bill, 2025, in the Lok Sabha has sparked concerns among taxpayers regarding their eligibility for income tax refunds if they file their Income Tax Return (ITR) after the due date. Several experts have pointed out that Clause 263(1)(a)(ix) of the new tax bill mandates that returns must be filed within the due date to claim refunds, a significant shift from the current provisions under the Income Tax Act, 1961.
What Does the New Income Tax Bill Say About Refunds?
Under the existing tax law, even if an individual files a belated return till December 31 of the assessment year, they can still claim a refund for any excess tax paid. However, as per the draft of the Income Tax Bill, 2025, taxpayers may lose this right if they fail to file their ITR before the due date (July 31 for most individual taxpayers).
A tax expert explains:
"Clause 263(1)(a)(ix) of the Income Tax Bill, 2025, states that a refund can only be claimed if the return is filed within the due date. Additionally, Clause 433 specifies that refunds must be sought only at the time of filing the return. This change could pose significant challenges for taxpayers who, due to unavoidable reasons, miss the deadline but are otherwise eligible for a refund."
Government Clarifies: No Change in Refund Rules
Amid rising speculation, the Income Tax Department issued a clarification stating that refund provisions remain unchanged. The department clarified:
"Refunds will continue to be processed under Section 270 of the proposed Income Tax Bill, 2025, and will be granted under Section 271(1)(e). If a refund is claimed in an invalid return, relief may still be available under Section 239, similar to Section 119 of the existing law."
This means taxpayers will still be able to claim refunds even if they file their ITR after the due date contrary to initial interpretations of the bill.
Can You Still Claim a Refund After the Belated Return Deadline?
If a taxpayer misses the final belated return deadline (December 31), they may still be able to request a refund through a condonation application under Section 119(2)(b). This requires a physical submission to the Principal Commissioner of Income Tax (Pr. CIT), with valid reasons for the delay.
A tax consultant explains:
"If a return is filed late, refunds can still be claimed through a belated return. However, if the return is not filed by December 31, a condonation request is required. Approval for such requests is at the discretion of tax authorities."
Key Takeaways for Taxpayers
- Under the existing tax law, refunds can be claimed even with a belated return filed by December 31.
- The Income Tax Bill, 2025, initially raised concerns that refunds would be denied if returns were filed late.
- The Income Tax Department has clarified that refunds can still be claimed under the new law, similar to existing rules.
- If a taxpayer misses the final deadline, they must apply for a refund under Section 119(2)(b) via condonation of delay.
Final Verdict: No Need to Panic
While initial interpretations of the Income Tax Bill, 2025, suggested a stricter approach to refunds, the government's clarification indicates that taxpayers will still be able to claim refunds even after the due date. However, it remains to be seen whether any further amendments will be made before the bill is finalized.
For now, taxpayers are advised to file their ITR before the due date to avoid penalties and unnecessary complications. If you miss the deadline, you may still be able to claim your refund but the process could be more cumbersome.
CAclubindia
