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Refund under Income Tax Act 1961
When
does refund become due
- When tax deducted
at source + advance tax paid + self assessment tax paid + tax paid on regular
assessment exceeds tax chargeable for the year.
- As a result of any
order passed in appeal or other proceeding, such as revision or rectification.
Who
can claim refund
- A person who has
paid more tax than the amount with which was due to him.
- A person in whose
total income is included in income of another person under any provision of
the Act.
- Where due to death,
incapacity, insolvency, liquidation or other cause, a person is unable to
claim or receive any refund due to him, his legal representative, trustee,
guardian or receiver, as the case may be, can claim and receive such refund
for the benefit of such person or his estate.
How
to claim refund
- In the normal course
refund is to be claimed, in the return of income itself. Refund is required
to be granted by the assessing Officer without any specific claim being made
where it becomes due as stated above under head "When does refund become
due".
- In the following
cases, however, claim for refund should be specifically made in prescribed
form (Form No.30):
- Where a person
becomes entitled to claim refund under section 238(1) or (2) of the Act.
- Where the return
of income shows income below the taxable limit and is filed in order to
claim refund.
Time
limit for claiming refund
- One year from the
last day of the assessment year.
- Where the following
conditions are satisfied the Assessing Officer may admit a belated refund
claim:
- the refund arises
as a result of excess tax deducted at source, collected at source and payment
of advance tax and the amount does not exceed Rs.1,00,000/-;
- the returned income
is not a loss, where the assessee claims the benefit of carry forward of
the loss;
- the refund claim
is not supplementary in nature, e.g., a claim for additional amount of refund
after the completion of the original assessment for the same assessment
year; and
- the income of
the assessee is not assessable in the hands of any other person under any
provisions of the Act.
Refund
on appeal
Where
refund arises as a result of any order passed in appeal or other proceedings
under the Act, no formal application from the assessee is required. The Assessing
Officer is bound to grant refund suo motu.
Where
by the order aforesaid:
(A)
an assessment is set aside or cancelled and an order of fresh assessment is
directed to be
made, the refund, if any, shall become due
only on the making of such fresh assessment;
(B) the assessment
is annulled, the refund shall become due only of the amount, if any, of the
tax
paid in excess of the tax chargeable on the
total income returned by the assessee.
Power
to withhold refund
Where
refund is due as a result of an order under the Act or under section 143(1)
after a return has been made under section 139 or in response to a notice
under section 142(1) and the Assessing Officer is of opinion, having regard
to the fact that (a) notice has been or is likely to be issued under section
143(2) in respect of the return or (b) the order is the subject matter of
an appeal or further proceeding or (c) any other proceeding under the Act
is pending that the refund is likely to adversely affect the revenue, the
Assessing Officer may, with the previous approval of the Chief Commissioner/Commissioner,
withhold the refund till such time as the Chief Commissioner/Commissioner
may determine.
Interest
on refunds
When
refund is of any advance tax (including tax deducted/collected at source),
interest is payable for the period starting from the first day of the assessment
year to the date of grant of refund. No interest is, however, payable if the
excess payment is less than 10 per cent of tax determined under section 143(1)
or on regular assessment. Interest is to be calculated at the rate of 1 per
cent per month or part of the month. No interest is payable for the period
for which the proceedings resulting in the refund are delayed for reasons
attributable to the assessee (wholly or partly).
Where
the refund is of tax other than advance tax or tax deducted at source, the
interest will be paid for the period starting from the date of payment of
such tax or penalty upto the date on which the refund is granted.
Set-off
of refunds against tax remaining payable
If a refund is found
to be due to any person, the tax authorities may, in lieu of payment of the
refunds, set off the amount to be refunded against the sum payable under the
Act by the person to whom the refund is due after giving written intimation
to such person.
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