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CBDT releases pending Income Tax Refund to MSMEs during COVID-19


As a relief to MSMEs, income tax refunds worth Rs.5,204 crore have been issued by CBDT in the last 10 days to nearly 8.2 lakh small businesses (proprietors, firms, corporate & trusts) since 8th April 2020 in view of COVID-19 situation.

In a tweet dated 17.04.2020, the CBDT says, "These refunds would help MSMEs to carry on their business activities without pay cuts/layoffs in COVID-19 pandemic situation."

Pursuant to Govt's decision of 8.4.2020, ITDeptt has issued nearly 14 Lakh refunds up to Rs. 5 Lakh each, till date, to help taxpayers as #IndiaFightsCorona, it further added.

The tweet further says, "Keeping its focus on providing relief to small businesses in MSME sector, CBDT will further issue refunds of Rs. 7,760 crore at the earliest possible. Taxpayers are requested to provide online responses through their e-filing a/c on, wherever required."

However, it is not clear how the refund of taxpayers own money amounts to 'relief'. Anyway, such a refund would obviously of immense help in this tight situation when there is almost dearth in cash flows in every sector more especially, in MSME sectors.

A press note released by the Ministry of Finance on 15.04.2020 states that aggregate income tax refund for Rs. 4,250 crore as on 14th April 2020. It further states that about 1.75 lakh more refunds are in the process of issuance in this week. These refunds would get credited directly to the taxpayer bank account in 5-7 business days from issuance.

In a separate release, the Central Board of Indirect Taxes and Customs (CBIC) said that it is fully committed to help the GST taxpayers in the present COVID-19 situation.

Since 30th March 2020, CBIC has processed 12,923 refund applications involving claims worth Rs 5,575 Crore, while in the last week itself, CBIC has processed 7,873 claims worth Rs 3854 Crore.

The CBIC said that a trade and business friendly measure taken by CBIC vide its Circular No. 133 dated 31.03.2020 to help GST returns filers to facilitate early ITC refunds and to ensure that the wrong ITC claims are not processed in the absence of relevant information, is misconstrued in certain section of social media and other media as troubling the taxpayers in COVID -19 like situation.

The CBIC said that this measure was taken into effect with GST Council’s approval in its 39th Meeting held on 14.03.2020 to mitigate delays in ITC refunds faced by the taxpayers besides ensuring that fake ITC claims are not processed. It had been brought to the notice of GSTC by various stakeholders including the taxpayers. It was noticed that lot of time is spent in verification of whether the credit was availed on services and/or Capital Goods in certain categories for the refund claims.

The CBIC said that in order to address the difficulty faced by trade in providing this data at the time of processing of claim leading to delays and increase in compliance cost, it was decided in the GST Council to make declaration of classification codes a part of the application itself. The GST Council in the same meeting has also decided to allow bunching of tax periods across financial years to facilitate claim of refund by exporters. This would apply to applications filed after 31.03.2020. It may also be noted that the due date of all such applications which were due during 20th March 2020 and 29th June 2020 has been extended to 30.06.2020.

Read the full text of the press release dated 17.04.2020 regarding the release of pending Tax Refund to MSMEs during COVID-19

Government of India
  Department of Revenue
Ministry of Finance
Central Board of Direct Taxes

New Delhi, the 17th April, 2020


As a relief to MSMEs, I-T refunds worth Rs 5,204 Crore issued in last 10 days by CBDT

The Central Board of Direct Taxes (CBDT) today said that Income tax refunds to nearly 8.2 lakh small businesses (proprietors, firms, corporate and trusts) worth Rs 5,204 Crore have been issued since 8th April 2020. These income tax refunds would help MSMEs to carry on their business activities without pay cuts and layoffs in Covid-19 pandemic situations.

The CBDT said that since the Government’s decision vide Press Note dated 8th April 2020, I-T department has till date issued nearly 14 lakh refunds up to Rs 5 lakh each in order to help taxpayers in COVID-19 pandemic situation. Keeping its focus on providing relief to the small businesses in MSME sector, CBDT will further issue refunds of Rs 7,760 Crore earliest possible.

The CBDT reiterated its request that in around 1.74 lakh cases, responses are awaited from taxpayers regarding reconciliation with their outstanding tax demand for which a reminder email has been sent asking them to respond within 7 days so that the refund can be processed earliest. 

It may be noted that these responses can be provided online through the taxpayer e-filing account on:

(Surabhi Ahluwalia)
Commissioner of Income Tax
(Media & Technical Policy)
Official Spokesperson, CBDT

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