Finance
The new Income Tax Bill, 2025, passed by the Lok Sabha, clarifies that late-return filers are eligible for refunds on excess taxes deducted in a financial year.
The plan to remove the need for small taxpayers to file returns in order to receive tax refunds was absent from the measure, according to analysts on Tuesday.
Section 433, which stated that “every claim for refund under this part shall be made by furnishing a return as per section 263,” was left unaltered by the new I-T Bill. Therefore, in effect, the legislation still demands a return of income in order to claim a refund; no other means are permitted.
According to the proposed measure, taxpayers who submit amended or late returns after the deadline will still be entitled for refunds.
Small taxpayers, including senior citizens, must file returns solely to claim a refund for excess taxes deducted at source (TDS), even if their income is below the basic exemption threshold.
The committee had recommended that taxpayers should not be required to file a return just to avoid penalties. “The current mandatory requirement solely to claim a refund could inadvertently lead to prosecution, particularly for small taxpayers whose income falls below the taxable threshold but from whom tax has been deducted at source. In such scenarios, the law should not compel a return merely to avoid penal provisions for non-filing,” the parliamentary panel had earlier suggested.
Preeti Sharma, Partner, Global Employer Services, Tax and Regulatory Services, BDO India, said, “The biggest advantage of the new law is that the common man may easily understand it with lesser efforts as compared to the old law. The revised bill has incorporated most of the changes recommended by the Select Committee. Taxpayers still have to undergo the process of assessing the right regime to follow while filing a tax return. Similarly, no changes are proposed in tax rates as introduced in Budget 2025.”
Incorporating the suggestions of a 31-member parliamentary group headed by BJP MP Baijayant Panda, the amended law was approved.
Source: IANS
