The Central Board of Direct Taxes (CBDT) has issued Circular No. 11/2024, which updates the guidelines for claiming refunds and carrying forward losses under the Income-tax Act, 1961. This circular replaces earlier instructions, aiming to provide clearer guidelines and ensure the timely processing of refund claims.
Below, we explore the key aspects of this update and how taxpayers can benefit from the latest changes.
Authority to Process Refund Claims
Circular No. 11/2024 specifies who can process refund and loss carry-forward claims, depending on the claim amount. This allows for faster claim resolutions:
- Claims up to ₹1 crore: Handled by the Principal Commissioners of Income-tax (Pr. CsIT/CsIT).
- Claims between ₹1 crore and ₹3 crores: Managed by Chief Commissioners (CCsIT).
- Claims exceeding ₹3 crores: Processed by Principal Chief Commissioners (Pr. CCsIT).
This new system ensures that claims are directed to the appropriate level of authority, reducing bottlenecks and expediting decision-making.
Streamlining the Time Limit for Filing Claims
Taxpayers must now submit their condonation applications within five years from the end of the assessment year. This time limit applies to all authorities, ensuring consistency across all cases. Claims submitted after 1st October 2024 must follow this rule, meaning late claims will no longer be entertained after this period.
In addition, authorities are required to resolve these applications within six months from the submission date. This change ensures that taxpayers get timely responses, enhancing overall efficiency.
Clear Guidelines for Delayed Filing of Returns
To justify condonation of delay, taxpayers must demonstrate two key factors:
- Reasonable Cause: The delay must be due to genuine circumstances beyond the taxpayer’s control.
- Genuine Hardship: The delay should result in significant difficulty for the taxpayer.
These clear conditions ensure that only valid cases of hardship are considered, preventing misuse of the condonation provision.
Special Consideration for Court-Related Refund Claims
If a refund claim arises from a court ruling, the time spent in litigation will not count toward the five-year limit. Taxpayers have an additional six months after the court’s decision to file for refunds. This provision ensures fairness, allowing taxpayers enough time to claim refunds without being penalized for prolonged court proceedings.
Supplementary Refund Claims
Taxpayers can submit supplementary refund claims—requests for additional refunds after the assessment year. The circular outlines strict guidelines for processing such claims:
- The income must not be assessable in the name of another person.
- No interest will be paid on late refund claims.
- Refunds must result from excess tax deductions or overpayment of advance/self-assessment tax.
These conditions ensure that the refund process remains transparent while addressing taxpayer needs.
Expert Insights on Circular No. 11/2024
Experts believe that the new guidelines simplify the refund process. According to MS Mani, Partner at Deloitte India, the six-month resolution timeframe for condonation applications is a welcome step toward improved efficiency. On the other hand, Tanushree Roy, Director of Indirect Tax at Nangia Andersen India, suggests that these reforms will prevent revenue shortfalls and provide a balanced approach to refund processing.
Supporting Case Laws
Several case laws align with the principles outlined in Circular No. 11/2024:
- Mohit Minerals Pvt Ltd v. Union of India: This case emphasized the need for fairness in refund claims arising from legal disputes, supporting the circular’s guidelines on court-related claims.
- CIT v. G.M. Knitting Industries Pvt Ltd: This case provided a precedent for accepting delayed claims when genuine hardship exists.
These cases reflect the need for tax policies to protect taxpayer rights while ensuring efficient processing of claims.
Conclusion: A Step Toward Efficiency and Clarity
Circular No. 11/2024 represents a significant improvement in managing income tax refunds and loss claims. By providing clear guidelines and reducing ambiguity, the circular optimizes the process for both taxpayers and the Income Tax Department. Taxpayers are encouraged to file claims within the specified time limits and ensure all conditions for condonation are met.
For those facing challenges with refunds or loss carry-forward, it is essential to understand these updated guidelines and seek professional advice to ensure compliance with the Income-tax Act, 1961.