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Government Shares Interesting Data showing Faster Income Tax Refunds


There were days when getting the income tax refund from the income tax department was a nightmare. But then CPC started processing the returns and refunds have been issued therefrom.

Once the CPC of the Income Tax department came into the picture, the process of getting income tax refunds becoming smooth and fast in each passing year.

In February 2019, the Income Tax department had announced that effective 01st March 2019 all the income-tax refund will be made in e-mode only. That is income-tax refund will not be made in cheques and will be directly credited to the assessee’s bank account. For this purpose, linking bank accounts with the PAN of the assessee was made mandatory and failing which no refund will be made to the assessee.

Hence, paper refund - refund by cheques, by draft has been restricted by the income tax department. Only in exceptional circumstances, paper refund or refund by cheques will be issued and that too after due approval, as instructed by the CBDT in this regard.

While giving a reply to the questions in the Parliament, Minister of State for Finance Anurag Thakur informed the Lok Sabha that there was a significant improvement in the promptness with which the income tax refunds were issued compared to the earlier periods. 

He said, "In FY 2019-20, 65% of the refunds have been released within 30 days as compared to 50 % in FY 2018-19. This shows significant improvement in the promptness with which the income tax refunds are issued."

It was further stated that the Government had been issuing Income Tax refunds to taxpayers expeditiously. The average time for the release of refunds during FY 2019-20 till 31.01.2020 was 59 days from the date of verification of Income Tax Returns (ITR) by the taxpayer.

For Income tax refunds prior to assessment year (AY) 2019-20, refunds are pending only in 33,175 cases which is 0.0001% of the total refund claims for these AYs.

For AY 2019-20, out of 2.3 crore ITRs with refund claims, refunds have been processed in 2.21 crore cases which is 92% of the cases. The balance refunds are under process as per extant provisions unless there are any exceptions due to the following reasons:

i. Defective returns filed by the taxpayer: In such cases, Income Tax Department sends communication to the taxpayer to rectify the defects. As and when defects are rectified, the refunds are released.

ii. Incorrect tax credits/claims: In this scenario the Department sends communication to tax deductors and taxpayers to rectify the errors and as soon as the same is rectified, the refunds are released.

iii. Delay due to incorrect bank account information given by taxpayer: In such cases the Department sends communication to intimate the taxpayer to validate the bank account details and as soon as the valid bank account details are available, the refunds are released.

iv. Cases under scrutiny: Refunds in certain cases which are subject to scrutiny under sub-section (3) of section 143 of the Act may be kept on hold as per provisions of section 241 A of Act till completion of assessment.

Since March 2019, all income tax refunds are credited directly to the bank account of the taxpayers through Electronic Clearing Service. This ensures faster and safer credit of refunds as compared to the earlier practice of issuance of paper cheques sent by post to taxpayer.

In order to speed up the processing of refund in small cases, refunds up to Rs 5,000 are being issued without adjustment of outstanding demand.

Mr. Thakur further informed that the Government had sanctioned CPC-ITR 2.0 Project which would have significantly higher processing capacity leading to faster determination and issue of refunds.

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