Amendment in Income Tax Bill, 2025 Regarding Refund Provisions
The government is likely to amend the controversial refund provision in the new Income Tax (I-T) Bill, 2025, which restricts refunds if the I-T return is filed after the due date, according to a finance ministry official.
Conflicting Sections in the Bill
- Section 433 of the new I-T Bill states that a refund must be claimed by filing a return, regardless of timeliness.
- Section 263(1)(a)(ix) specifies that to qualify for a refund, the return must be filed on or before the due date.
- This creates a contradiction in the refund process.
Experts and stakeholders have noted this issue as a drafting error, which will be rectified. The provisions related to refunds will remain consistent with current law.
Legislative Process
- Union Finance Minister introduced the new I-T Bill on February 13.
- A select committee of 31 MPs was formed to review it.
The Central Board of Direct Taxes (CBDT) invited stakeholder suggestions to enhance clarity and reduce taxpayer compliance burdens. The select committee will submit its report at the start of the monsoon session of Parliament.
Current I-T Return Filing Deadlines
- For most individual taxpayers, the deadline is typically July 31.
- For businesses and professionals requiring a tax audit, the deadline is October 31.
- Belated returns may be filed until December 31, which could incur penalties and limit benefits.
Expert Opinions
- Vivek Jalan from Tax Connect Advisory Services highlights that the discrepancy could lead to issues for taxpayers who miss deadlines.
- Punit Shah from Dhruva Advisors notes that the interplay between Sections 263 and 433 causes confusion and suggests amending these provisions.
If the Bill is passed, the new law may take effect from April 1, 2026.
