Claiming Delayed Income Tax Refunds: Relief Through CBDT’s Special Provisions

Income Tax Refunds

Claiming Delayed Income Tax Refunds: Relief Through CBDT's Special Provisions

Income Tax Refunds

Taxpayers often find themselves in situations where they have paid income tax in excess of their actual liability—either through Tax Deducted at Source (TDS), Tax Collected at Source (TCS), or advance tax. In such cases, a refund can be claimed, provided the return of income is filed within the time limits specified under Section 139 of the Income Tax Act, 1961. This applies even when the taxpayer’s total income falls below the basic exemption limit.

But what happens when a refund claim is delayed beyond the permissible time? Fortunately, the Income Tax Act, through Section 119(2)(b), empowers the Central Board of Direct Taxes (CBDT) to condone such delays and allow refund claims under certain conditions.

Understanding Section 119(2)(b): A Relief Mechanism

Section 119(2)(b) enables the CBDT to issue special or general orders to allow income tax authorities to admit delayed applications for exemptions, deductions, refunds, or any other relief—even after the expiry of statutory time limits. This provision is a safeguard for genuine taxpayers who, due to circumstances beyond their control, miss the due dates.

The CBDT has issued various circulars to operationalize this relief, most notably Circular No. 9/2015, which has been amended from 1st June 2023 to revise the monetary thresholds for refund claims.

Income Tax Refunds

Revised Authorities for Delayed Refund Claims (w.e.f. 1st June 2023)

Refund AmountAuthority to Approve Delay
Up to ₹50 lakhsCommissioner/Principal Commissioner of Income Tax (CIT/PCIT)
₹50 lakhs – ₹2 croreChief Commissioner of Income Tax (CCIT)
₹2 crore – ₹3 crorePrincipal Chief Commissioner of Income Tax (PCCIT)
Above ₹3 croreCentral Board of Direct Taxes (CBDT)

Eligibility Conditions for Delayed Refund Claims

As per the CBDT circulars, the following conditions must be met for claiming a delayed refund:

  1. Reason for Refund: The claim must be due to excess TDS, TCS, or advance tax payment.

  2. Time Limitation: The claim is allowed for only the last six assessment years.

  3. No Interest on Refund: Interest under Section 244A will not be granted on delayed refunds allowed under condonation.

  4. Verification and Assessment: The concerned tax officer will verify the genuineness of the claim and may issue an assessment order if required.

  5. Processing Timeline: Once the condonation application is admitted, the process is expected to be completed within six months.

Important: File Return Even If Income is Below Taxable Limit

Many taxpayers mistakenly assume that if their income is below the taxable threshold, they do not need to file a return. However, this can result in losing the opportunity to claim a refund.

Example: Suppose an individual earns only ₹2,00,000 as interest income during the year, and the bank deducts TDS of ₹20,000. Though the income is below the basic exemption limit, the taxpayer must file the return within the due date under Section 139 to claim the refund.

Due Dates for Filing Return of Income (From AY 2022-23 Onwards)

Category of AssesseeDue Date
Companies, persons requiring audit, and partners/spouses under Section 5A31st October
All other assessees31st July

Note: If the due date is extended by CBDT, the extended date is applicable.

Set-Off of Refund Against Outstanding Demand – Section 245

Section 245 allows the Income Tax Department to adjust refunds against existing tax demands. However, the law is clear that:

  • Refunds can be withheld up to 60 days only if assessment or reassessment proceedings are pending, and with prior approval from the CIT/PCIT.

  • Future or anticipated tax liabilities cannot be a reason to withhold a due refund.

  • Any refund amount not adjusted must be issued to the taxpayer promptly.

Read More: New ITR Forms for AY 2025–26: ITR-1 & ITR-4 Now Allow Reporting of LTCG under Section 112A

While timely filing of income tax returns remains critical for claiming refunds, the CBDT’s power under Section 119(2)(b) offers relief in genuine cases of delay. Taxpayers who have inadvertently missed the deadline but are eligible for a refund due to excess TDS, TCS, or advance tax can apply for condonation and still receive their rightful amount—albeit without interest.

If you believe you’re eligible for a delayed refund, consult your tax advisor or approach the appropriate authority as per your refund amount. Being proactive can help recover significant amounts that may otherwise go unclaimed.

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Unlock Foreign Tax Credits: A Step-by-Step Guide for Indian Residents

Foreign Tax Credits

Unlock Foreign Tax Credits: A Step-by-Step Guide for Indian Residents

Foreign Tax Credits

Indian residents who earn income from overseas often find themselves facing double taxation—once in the country where the income is earned and again in India, where they are tax residents. To address this, the Indian Income-tax Act provides for Foreign Tax Credit (FTC), which allows taxpayers to claim credit for taxes paid abroad against their Indian tax liability.

🔍 What Is Foreign Tax Credit (FTC)?

Foreign Tax Credit is a tax relief mechanism that allows Indian residents to claim a credit for foreign taxes paid on income that is also taxed in India. It ensures that the same income is not taxed twice due to overlapping tax jurisdictions.

📜 Legal Provisions Governing FTC

  • Section 90 / 90A: FTC is allowed when India has a Double Taxation Avoidance Agreement (DTAA) with the foreign country or specified territory.

  • Section 91: Even in cases where no DTAA exists, FTC can be claimed unilaterally under this section.

  • Rule 128 of Income-tax Rules: This rule governs the manner of computation, conditions, and procedural requirements for claiming FTC.

🌍 Eligibility to Claim FTC

  • The taxpayer must be a resident of India.

  • Foreign income must also be taxable in India.

  • Foreign taxes must have been actually paid or deducted.

  • FTC is allowed only in the year in which the foreign income is offered to tax in India.

🧮 How Is FTC Calculated?

  • FTC is computed source-wise and country-wise.

  • The credit is restricted to the lower of:

    • Tax payable in India on the foreign income, or

    • Foreign tax paid on that income.

Example:

ParticularsAmount (INR)
Doubly taxed income50,00,000
Tax paid in foreign country7,50,000
Tax payable in India on same income15,00,000
Eligible FTC7,50,000

FTC is not available against interest, fee, or penalty payable under the Indian tax laws.

🔄 Treatment of Disputed Foreign Taxes

If foreign taxes are under dispute, FTC can be claimed in the year the dispute is finally settled and taxes are paid, provided:

  • Evidence of settlement and payment is furnished,

  • A declaration is submitted that no refund of such taxes has been or will be claimed,

  • This must be done within six months from the end of the month of settlement.

🔁 Foreign Tax Refunds & Adjustments

If you receive a foreign tax refund after having claimed FTC in India, you must:

  • Revise the Indian return for the year FTC was originally claimed,

  • Submit a revised Form 67 within the prescribed time,

  • This applies whether the refund is due to a carry-back of losses or a revision in average tax rate.

💱 Currency Conversion for FTC

Foreign taxes paid must be converted to INR using the telegraphic transfer buying rate of the last day of the month preceding the month of tax payment.

🇺🇸 Special Note on USA Taxes under India-USA DTAA

Only Federal taxes paid in the USA qualify for FTC in India. The following do not qualify:

  • State income taxes,

  • Social Security taxes,

  • Personal holding company tax,

  • Accumulated earnings tax.

📄 Documents Required to Claim FTC

As per Rule 128, the following must be furnished:

  1. Form 67, which includes:

    • Details of foreign income offered to tax,

    • Taxes paid or deducted abroad.

  2. One of the following documents:

    • Certificate from foreign tax authority,

    • Certificate from deductor,

    • Self-signed declaration by the taxpayer,

      • Accompanied by bank challan/acknowledgment or payment proof.

📅 Form 67 Filing Deadline

Form 67 must be filed:

  • On or before the end of the relevant assessment year, and

  • Along with the original (u/s 139(1)) or belated (u/s 139(4)) return of income.

In case of updated returns (u/s 139(8A)), Form 67 must be filed before filing the updated return.

Foreign Tax Credits

🌐 OECD Guidelines: Methods to Avoid Double Taxation

The OECD Model Tax Convention outlines two main methods to relieve double taxation:

  1. Exemption Method (Article 23A): Income is taxed only in one country.

  2. Credit Method (Article 23B): Taxes paid abroad are credited against domestic tax liability.

India typically follows the Credit Method, aligning with Article 23B in most of its DTAAs.

Read More: New Tax Regime: A 7-Point Checklist for Taxpayers Filing ITR

✅ Key Takeaways

  • FTC prevents double taxation on foreign income taxed in India.

  • Separate computation is required for each income source and country.

  • Timely and accurate filing of Form 67 is crucial to claim FTC.

  • Keep a close watch on any subsequent foreign tax refunds and revise returns if needed.

provisions can significantly optimize your tax outgo. Ensure documentation is complete and deadlines are met to fully benefit from the foreign tax credit mechanism.

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ITR Form 7 for AY 2025-26: Key Updates for Trusts, Institutions & Political Parties

ITR Form 7

ITR Form 7 for AY 2025-26: Key Updates for Trusts, Institutions & Political Parties

ITR Form 7

The Central Board of Direct Taxes (CBDT) has officially notified Income Tax Return (ITR) Form 7 for the Assessment Year (AY) 2025-26 through Notification No. 46/2025 dated 9th May 2025. The amendments form part of the Income-tax (Eighteenth Amendment) Rules, 2025, which take effect from April 1, 2025.

Who Should File ITR Form 7?

ITR Form 7 is to be furnished by persons — including companies — that are required to file returns under any of the following provisions of the Income-tax Act, 1961:

  • Section 139(4A) – Income of charitable/religious trusts

  • Section 139(4B) – Income of political parties

  • Section 139(4C) – Income of specific institutions (e.g., research associations, universities)

  • Section 139(4D) – Income of universities, colleges, or institutions not covered under other provisions

This form is primarily applicable to charitable trusts, political parties, educational institutions, research institutions, and certain notified entities.

How to File ITR-7?

ITR-7 must be filed electronically via the Income Tax Department’s e-Filing portal www.incometax.gov.in, and verified using any one of the following methods:

  • Digital Signature Certificate (DSC)

  • Electronic Verification Code (EVC)

  • Aadhaar-based OTP

  • By sending duly signed paper Form ITR‐V – Income Tax Return Verification Form by speed post only to CPC at the following address- Centralized Processing Centre, Income Tax Department, Bengaluru- 560500, Karnataka.

ITR Form 7

Special Note for Political Parties

Political parties must mandatorily submit the return through the digital verification methods (DSC, EVC, or Aadhaar OTP). Submission via physical ITR-V is not permitted for these entities.

Audit Report Filing Requirements

Entities required to furnish an audit report under the following sections are mandated to file the audit report electronically, at least one month prior to the due date of filing the return under Section 139(1):

  • Sections 10(23C)(iv), (v), (vi), (via)

  • Section 12A(1)(b) (for trusts registered under Section 12AB)

  • Section 92E (for international or specified domestic transactions)

Read More: Income Tax Filing 2025: Key Changes Introduced in ITR Forms for FY 2024-25

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