a) Difficulties in obtaining old paper refunds

-Presently, the refund, if exceeds Rs. 1 lacs requires approval from the higher authorities. Apart from these, re-issue of old paper refunds, already issued by the department before the implementation of Refund Banker Scheme but not received by the  assessee, also requires approval from the higher authorities. The second part of the administrative steps in refund cases have become very cumbersome procedures and at the same time also increases the responsibilities of the higher authorities. Moreover, refunds in such cases often delayed by more than 6 months inspite of furnishing of bank pass book and the indemnity bond by the assessee in support of refund not received by them.

Suggestions – It is suggested that old paper refunds not exceeding Rs.1 lakh, issued by the department and not received by the assessees, may not require approval from higher authorities and must be left to the Assessing Officers for disposal. This will help in reducing the pending grievances of nonreceipt of old paper refunds.

b) Refunds not delivered due to change in address

The assessees frequently change their addresses due to several reasons like change in job, marriage etc. However, in majority of cases they are unable to get their refund cheque due to changed address. Even if they disclose the current address in the Income-tax return, the refund cheque often goes to the older address and thus remains undelivered.

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SuggestionsTo handle such cases, it is suggested that once the return has been processed by CPC, the file should be transferred to respective Assessing Officer, with whom the assessee can interact to resolve the issues in the processing of return, non receipt of refund cheque and so on.

c) Issue of Refunds in case of legal heirs

New set of guidelines can be issued for granting refund of tax to the legal heirs of deceased assesses. Most of the refund claims are pending for several
months as the department software (AST) requires Court Order for payment of refund. Minimum period of disposal of order by Court is about 2 years. Obtaining Court Order can be relaxed for refunds not exceeding Rs.50,000/- and refund can be given as per the discretion of the Assessing Officer.

SuggestionsIt is suggested that in case of refunds of an amount not exceeding Rs. 50,000 which are payable to legal heirs of deceased assessee, the condition of obtaining Court Order be relaxed and refund be given as per the discretion of the Assessing Officer.

d) Refund amount to be directly paid into the bank accounts of the assessees

The speed and the amount of refunds that have been granted by the Department in last few years have been commendable. In order to be further be effective and assessee friendly, it is suggested that the refunds in respect of efiled returns as well as manual returns be issued directly into  assessees bank account within maximum time limit of 6 months from filing of returns. This would solve the problem of undelivered refund cheques and also save on interest which is paid by the Government on delayed refunds.

Suggestions  It is suggested that the refunds in respect of all returns (e-filed returns as well as manual returns) be mandatorily deposited directly into assessee’s bank account within maximum time limit of 6 months from filing of returns.

Source- Pre-budget Memorandum 2014 on direct taxes by (Institute of Chartered Accountants of India

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Category : Income Tax (25145)
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Tags : Income Tax Refund (198) TDS (899)

0 responses to “ICAI gives suggestions for improvement in Income Tax Refund Issue Process”

  1. kamal mukherjee says:

    It is a very good idea to make IT refunds
    directly to payees Bank a/c through ECS
    mandate .this option should be included
    in IT return and refunds via paper cheques
    should be abolished.

  2. A. Ranganathan says:

    I agree with all that is said on refunds except o making the AO the sole authority to decide. Not all AOs are honest, As we can see from several news reports, there are black sheep among them too.

    No income tax should be levied on the interest paid on the amount of refund. This is noit a earning per se.

  3. R.L.Garg ( ADVOCATE) says:

    I raised different points and probably many of us faces this difficuilty which need different attitude on the part of Tax authorities. Please comment on these points also

  4. s sudarshana says:

    (1) Refund is granted to those who have paid the tax and if we go by common sense, almost all of us (them, the tax payers) have bank accounts. IT department should do away with returning the refund by DD/Cheque by post. They should make it mandatory for all assessees to furnish one of their Savings Bank(or any) bank account for the refund. The department has already done enough to enable the assessees to check their refund status online.
    (2) They should give the same interest for delay in refunds as they take from those assessees who have not paid the tax in time. This will be a fair deal.

  5. R.L.Garg ( ADVOCATE) says:

    I know the cases where the A.O.has completed the Assessment showing refun but no refund is given despite follow up . In such cases A.O. must be made answerable and penalised. The Income tax consider themselves as lords because if any assessee take up the matter with OMBUDSMAN they take revenge in the following years because the assessee has to come before him every year, It leads to corruption. To avoid corruption a system of appraisal must be initiated in the Deptt.
    tHE ASSESSEE MAY BE ASKED TO FURNISH THE DETAILS OF REFUNDS WITH THE HIGHER AUTHORITIES TO LOOK INTO THE MATTER AS WELL AS PROCESS THE REFUNDS QUICKLY.

    THERE ARE LARGE NUMBER OF SUCH CASES

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