IT department aims to promptly address issues with tax refunds

To prevent unneeded litigation, the income-tax department has given orders to guarantee that taxpayer complaints about the adjustment of tax dues against pending refunds are expeditiously resolved.

The tax department has informed its highest officials, including all main chief commissioners, that it has seen instances of tax refunds that are owed to assessees being incorrectly offset by unpaid tax claims. This, according to the government, is a result of tax demands being incorrectly labelled as "proper and collectable" or of assessees not receiving feedback from tax authorities regarding complaints they have filed.

According to orders from the Directorate of Income Tax, this has caused unneeded litigation (Systems).

According to the law, the tax office may, after notifying the assessee, adjust the refund owed in response to an unmet demand. The taxpayer and the assessing officer will be made aware of it by the department's Centralized Processing Centre (CPC) in Bengaluru. 15 days are given for the taxpayer to respond to the officer. Officers had 30 days up to this point to correct or confirm the tax demand, which had to be reported to CPC.

The Central Board of Direct Taxes (CBDT) had been informed, according to the instruction, that while assessing officials are expected to respond within 30 days, this often does not happen, causing delays in the issuance of refunds.

According to the directive, assessing officers now have 21 days instead of 30 days to react to taxpayers' representations. If the officer does not reach a conclusion regarding the matter, refunds will be granted by the tax authority's centralised processing unit. Furthermore, CPC will provide refunds to the taxpayer immediately and won't keep them for longer than 21 days.

The order said that assessing officers will be held accountable for any delayed or absent responses. Additionally, the tax agency cited improved information technology-related skills and online contact tools between taxpayers, officials, and the CPC as reasons why the directive needed to be revised. According to experts, the new set of instructions will assist taxpayers in resolving their issues.

The tax division has been concentrating on expediting the processing of tax returns and the issuance of refunds. According to official figures, it has granted refunds totaling 1.83 trillion in the current fiscal year as of 10 November, which is 61% more than it did at the same time last year.