Summary: Taxpayers who have paid income tax exceeding their actual liability are generally required to file their return of income within the due date specified under Section 139 of the Income Tax Act, 1961, to claim a refund. This requirement applies even if the total income is below the taxable limit, as demonstrated in cases where tax deducted at source (TDS) or advance tax has been paid. However, recognizing instances of genuine hardship, Section 119(2)(b) empowers the Central Board of Direct Taxes (CBDT) to authorize tax authorities to admit delayed refund claims. Amended CBDT Circulars outline a tiered system for approving such claims based on the refund amount, with thresholds for jurisdiction ranging from the Commissioner of Income Tax for refunds up to Rs. 50 lakhs to the CBDT itself for amounts exceeding Rs. 3 crore. Delayed refund applications are typically considered for excess TDS, tax collected at source, or advance tax payments, are generally limited to claims for the last six assessment years, and do not entitle the assessee to interest on the refund amount. Authorities will verify the genuineness of the claim, and while refunds can be set off against existing tax demands under Section 245, potential future liabilities cannot be a ground for withholding a due refund.
When an assesse has paid tax, more than tax payable, can he get refund for excess tax paid?
To claim refund of excess tax paid, it has been mentioned under Section 239, that as per the provisions of Section 139, assesse must have file his return of income. Again the return of income must be submitted before the last date, as mention in Section 139.
From the above facts, an assesse has only interest income of Rs. 2,00,000 and tax has been deducted from that amount @10%, say Rs.20,000. It is clear that assesses total income is below taxable income, therefore he has not submitted his return of income. Now the question is when assesse can get refund of Rs.20,000? Assesse must file his return of income, though there is no taxable income and that too before the last date as mentioned in Section 139 of the Income tax.
It is necessary to know the last date of submitting return of income. As per section 139, the due dates for filling of return of income for various categories of assesse are as under:
From Assessment Year 2022-23 and onwards:
(i) where the assesse is a company; or a person (other than a company) whose accounts are required to be audited under Income Tax Act or any other law; or a partner of a firm whose accounts are required to be audited under income tax act or any other law for the time being in force, or the spouse of such partner if the provisions of section 5A applies to such spouse
By 31st October
(ii) in the case of any other assesse other than (i) above
By 31st July
Due date is to be considered Extended due dates. Many times due to some or other reason due date is extended, in that case extended due date is to be considered.
For delayed claim of refund CBDT have issued Circulars: Section 119(2)(b) read as under:
The Board may, if it considers it desirable or expedient so to do for avoiding genuine hardship in any case or class of cases, by special or general order, authorize [any income tax authority, not being a joint commissioner (Appeals) or a Commissioner (Appeals) to admit an application or claim for any exemption, deduction, refund or any other relief under this Act after the expiry of the period specified by or under this Act for making such application or claim and deal with the same on merits in accordance with law;
Circular No 9/2015 dated 9th June, 2015 is being amended from 1st June, 2023, accordingly, delayed claim of refund is to be considered with following limit of refund:
- Delayed refund up to Rs. 50lakhs, an application is to be made to Commissioner of Income Tax or Principal Commission of Income Tax (CIT/PCIT) of their jurisdiction.
- Delayed refund of more than Rs.50laks but less than Rs.2cror to Chief Commissioner of Income Tax (CCIT) of his jurisdiction.
- Delayed refund of more than Rs.2cror but less than Rs.3cror to Principal Chief Commissioner of Income Tax (PCCIT) of his jurisdiction.
- Delayed refund of more than Rs.3cror to direct Central Board Of Direct Taxes.(CBDT)
Under which circumstances delayed refund application can be done?
As per clarification made by CBDT under their circular that under the following circumstance an application for delayed refund application can be done.
(1) Refund claim is due to Tax Deducted at Source, Collected at Source or excess payment of Advance Tax;
(2) This kind of claim of refund is allowable up to last six assessment years only;
(3) Assesse is not entitled for interest on refund amount;
(4) Concern Officers will verify the Genuineness of the refund and assessing officer may do the assessment of the case and sent a order.
(5) After receiving an Application for Condo nation, process will start within six months.
Under Section 245, there are certain instructions for set off of refund.
Under this section 245, Central Board of Direct Taxes have given certain instructions for set off of refund, which are as under:
- Where a part of the refund is set off under the provisions of sub section (1), or where no such amount is set off, and refund becomes due to assesse, and the Assessing Officer having regard to the fact that proceedings for assessment or reassessment are pending in this case he may, for reasons to be recorded in writing and with the previous approval of the Principal Commissioner or the Commissioner, as the case may be, withhold the refund up to sixty days from the date on which such assessment or reassessment is made.
- In future liability of tax will arise, on that basis refund cannot be held. As per section 245 when refund is due, on that day any demand is outstanding that only can be set off.
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