Deadline for unprocessed income tax refund extended

The Central Board of Direct Taxes (CBDT) has said that all income tax returns (ITR) that are validly filed electronically up to AY 2020-21 with refund claims under section 143 (1) would now be processed by April 30, 2024, unless otherwise prescribed.

CBDT in the circular dated January 31, 2024, said, “The matter has been re-considered by the Board in view of pending taxpayer grievances related to the issue of refund. To mitigate the genuine hardship being faced by the taxpayers on this issue, Board hereby further extends the time till 30.04.2024 in respect of returns of income validly filed electronically up to AY 2020-21. All other contents of the said orders under section 119 will remain unchanged.”

However, for an ITR to have a refund claim your ITR calculation must match with that of the income tax department, then only a tax refund would be issued. Before the income tax refund is credited to your bank account, an intimation notice under section 143(1) will be sent to your registered email ID.

Which taxpayers will not get an income tax refund?

CBDT in a circular dated December 1, 2023, said that the extended time limit for processing old ITRs with refund claims is not applicable in the following cases:

  • If the said ITR is selected for scrutiny, or
  • ITR is unprocessed because a tax demand is shown as payable in the ITR or is likely to show once the said ITR is processed, or
  • ITR remained unprocessed due to any reason attributable to the taxpayer.

What is the usual timeline for processing of ITRs?

The income tax department’s centralised processing center (CPC) must process an income tax return (ITR) within nine months from the expiry of the financial year in which the ITR was filed. For example, ITR filed for FY 2022-23 (AY 2023-24) must be processed by December 31, 2024

This rule was revised with effect from April 1, 2021. Till FY 2020-21 (AY 2021-22), as per the old rule, the income tax department had time till one year from the end of the financial year in which the ITR was filed.

“Income tax returns filed are processed online at CPC. After processing the ITR, an intimation is issued under section 143(1), which shows the computation of income per taxpayer as well as the tax department. It also provides details of outstanding old demand if any. Earlier, the last date of issuing intimation was 12 months from the end of the year in which ITR is filed. By Finance Act, 2021 it was reduced to 9 months,” says Mihir Tanna, associate director, of S.K Patodia & Associates LLP, a CA firm.

Why were the ITRs not processed till now?

Tax experts decode that due to technical issues not due to the taxpayer’s fault the ITRs could not be processed. According to Tanna, “Due to certain technical issues or for other reasons not attributable to the taxpayer concerned, several ITRs for various years could not be processed, intimation under section 143 (1) regarding the processing of such ITRs could not be sent within the prescribed time limit and the taxpayer was unable to get his/her tax refund in accordance with provisions of the Income Tax Act.”

The income tax department issued a similar order dated December 1, 2023, for processing of old ITR filed for AY 2018-19, AY 2019-20, and AY 2020-21. On October 16, 2023, a similar order was issued for processing of old ITR filed for FY 2016-17 (AY 2017-18) and issuing a tax refund by January 31, 2024.

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William Murphy

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