Income Tax Refund News: Relief for Filers of ITR

Positive Update For Those Awaiting Income Tax Refunds: Individuals who haven't received their tax refunds for FYs 2017-18, 2018-19, and 2019-20 will now be able to receive them by January 31, 2024. The income tax department has issued an order to facilitate this, addressing delays in processing due to expired time limits.

It is essential to know that “Your ITR calculation must align with that of the income tax department, to receive an income tax refund. Once verified, an intimation notice under section 143(1) will be sent to your registered email ID before the refund is credited to your bank account. 

The recent order from the income tax department, dated December 1, 2023, addresses technical issues or other non-asssee-related reasons that led to delays in processing validly filed returns for AYs 2018-19, 2019-20, and 2020-21. The department will prioritize processing these pending ITRs, benefiting individuals awaiting tax refunds for the mentioned financial years.

According to income tax regulations, there's a deadline for the department to process individuals' filed ITRs. The current timeline is nine months from the end of the financial year in which the ITR was submitted. For example, an ITR filed for FY 2021-22 (AY 2022-23) should be processed by December 31, 2023. This rule was updated starting April 1, 2021. Before that, until FY 2020-21 (AY 2021-22), the department had a one-year timeframe.

For FYs 2017-18, 2018-19, and 2019-20 (as per the order), the department originally had until March 2020, March 2021, and March 2022, respectively, to process the ITRs.

As per the recent announcement, only ITRs filed under sections 139, 142 (1), or 119 with eligible tax refunds will now be processed by January 31, 2023, under section 143 (1). This includes belated ITRs filed for the specified financial years, making them eligible for income tax refunds.

Who is excluded from receiving past income tax refunds?

The recent order specifies that the following unprocessed ITRs do not qualify for this relief:

a) ITRs under scrutiny,

b) ITRs that remain unprocessed for reasons attributable to the assessee,

c) ITRs that remain unprocessed, where the ITRs show a demand as payable or are likely to arise after processing.

The income tax department explicitly states that ITRs meeting any of these criteria, including those with additional tax payable, potential tax demand after processing, or selected for scrutiny assessment, will not be processed by January 31, 2024. 

This also means that if an individual filed an ITR, expecting a tax refund for a specific assessment year (e.g., AY 2018-19), but after processing, a tax demand arises, the ITR won't be processed by January 31, 2024. In such cases, individuals will not receive any intimation notice under section 143(1) of the Income-tax Act.

A similar order was issued by the income tax department on October 16, 2023, for processing old ITRs filed for FY 2016-17 (AY 2017-18) and issuing old tax refunds by January 31, 2024. Now, this extension is being applied to ITRs filed for AY(s) 2018-19, 2019-20, and 2020-21.

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