Last updated: July 3rd, 2024 5:40 PM

CBDT Revises Monetary Limits for Condonation of delay for refund claim and carry forward losses

The Central Board of Direct Taxes (CBDT) vide a Circular 9/2015 dated 09-06-2015, provided guidelines to handle requests for Condonation of delay in filing income tax returns that seek refunds or carry forward of losses and their set-off under section 119(2)(b). This circular outlined detailed instructions on the requirements and process to be followed when deciding on applications for condoning delayed filing of income tax returns. This article will look at the Monetary Limits for Condonation of delay for a refund claim.

Condonation of delayed income-tax

Condonation of delayed income-tax refund refers to granting permission or approval for a taxpayer to receive their income-tax refund even if the filing or processing of their refund claim has been delayed beyond the prescribed timelines. This Condonation allows the taxpayer to still receive their entitled refund, despite the delay in submitting the claim within the stipulated time frame. The income-tax authorities can consider and approve delayed refund claims based on specific criteria and guidelines.

Condonation of Delayed Income Tax Refunds and Claim Verification

The process of condoning delayed income tax refunds involves submitting an application within six years (excluding the period during which proceedings were pending before a court) from the end of the relevant assessment year.

• These applications for Condonation must be processed within six months from the end of the month in which the application is submitted.
• Under section 119(2)(b) of the Income Tax Act, refund claims can only be made for the excess tax deducted at source, tax collected at source, advance tax, or self-assessment tax. No interest is granted on income tax refund claims or supplementary refund claims.
• The tax authority is responsible for verifying the accuracy and genuineness of the refund or loss claim and determining if there was genuine hardship.
• The Income Tax authority authorized to handle delayed refund or loss claims can instruct the jurisdictional Assessing Officer to conduct an inquiry or scrutiny to verify the correctness of the claim.

Monetary Limits and Competent Income-Tax Authorities for Condonation of Delay in Filing Returns

In 2015, the Central Board of Direct Taxes issued Circular No. 9/2015 dated 09.06.2015, which established the income-tax authorities authorized to accept or reject applications for Condonation of delay in filing income tax returns that involving claims for refunds or carry forward of losses with their set-off. The circular outlined specific monetary limits for each authority as follows:

• Principal Commissioners of Income-tax or Commissioners of Income-tax (Pr.CsIT/CsIT):
  • The monetary limit for claims handled by these officials is not more than Rs. 10 lakhs for any one assessment year.
• Principal Chief Commissioners of Income-tax or Chief Commissioners of Income-tax (Pr.CCsIT/CCsIT):
  • The monetary limit for claims handled by these officials is more than Rs. 10 lakhs but at most Rs.50 lakhs for any one assessment year.
• Central Board of Direct Taxes (CBDT):
  • The monetary limit for claims exceeding Rs. The CBDT handles 50 lakhs. The CBDT is the highest authority in the income-tax department in India.

The table presents the different income-tax authorities and their respective monetary limits for accepting or rejecting applications for Condonation of delay in filing returns about refund claims and carrying out losses with set-off.

Revised Monetary Limits for Condonation of Delay for Refund Claims and Carry Forward of Losses

With the new circular effective from 1st June 2023, the monetary limits for Condonation of delay for refund claims and carry forward of losses have been revised as follows:

Principal Commissioners of Income-tax/Commissioners of Income-tax (Pr.CsIT/CsIT):

The power to accept or reject applications or claims lies with the Principal Commissioners of Income-tax/Commissioners of Income-tax (Pr.CsIT/CsIT) if the claim amount is up to Rs 50 lakhs.

Chief Commissioners of Income-tax (CCsIT):

The Chief Commissioners of Income-tax (CCsIT) can accept or reject applications or claims if the claim amount exceeds Rs 50 lakhs but is not more than Rs 2 crore.

Principal Chief Commissioners of Income-tax (Pr.CCsIT):

The Principal Chief Commissioners of Income-tax (Pr.CCsIT) can accept or reject applications or claims if the claim amount exceeds Rs 2 crores but is at most Rs 3 crores.

Central Board of Direct Taxes (CBDT):

The Central Board of Direct Taxes (CBDT) has the power to consider applications or claims if the claim amount exceeds Rs 3 crores. It's important to note that the guidelines mentioned in the 2015 Circular related to the Condonation of delay for refund claims and carry forward of losses remain unchanged. Suppose the monetary limits for condoning the delay in filing refund claims or claims for carrying forward losses are unmet. In that case, the authorities above can reject such applications or claims.

Expansion of Authority to Handle Refund/Loss Claims from 01-06-2023

As mentioned above, effective from 1st June 2023, the powers of Principal Commissioners of Income-tax and Commissioners of Income-tax have been increased to handle refund and loss claims. Previously, the authority of Principal Commissioners and Commissioners was limited to claims up to INR 10,00,000/- and INR 50,00,000/- per assessment year, respectively.

• With the new changes, Commissioners of Income-tax are now empowered to handle Income Tax refund and loss claims ranging from INR 50,00,000/- to INR 2,00,00,000/-. Claims below INR 50,00,000/- will not fall under their jurisdiction.
• Similarly, Principal Commissioners of Income-tax have been granted increased authority to deal with Income Tax refund and loss claims ranging from INR 50,00,000/- to INR 3,00,00,000/-. They are not authorized to handle claims below INR 2,00,00,000/-.
• For claims exceeding INR 3,00,00,000/-, the Central Board of Direct Taxes will now handle the processing and evaluation. This represents a significant change compared to the previous limit of INR 50,00,000/- for refund and loss claims escalated to the Central Board of Direct Taxes.

These adjustments aim to streamline and distribute the authority for handling refund and loss claims based on their respective monetary thresholds. Additionally, it is crucial to note that condonation applications for refund or loss claims will only be accepted up to six years from the end of the assessment year for which the application or claim is made. It is, therefore, essential to adhere to these limits to prevent the denial of such applications or claims.