35 lakh income tax refunds delayed in India: Here's why
Income tax refunds for around 35 lakh taxpayers are currently "held up" due to mismatch and validation issues with their bank accounts, as per Central Board of Direct Taxes (CBDT) Chairperson Nitin Gupta. The Income Tax Department is actively working to resolve these issues by reaching out to affected taxpayers through a special call center. Gupta emphasized the department's goal to quickly credit refunds to the correct bank accounts of taxpayers.
Unique demand management facilitation system aids in resolving issues
The Income Tax Department has implemented a unique demand management facilitation system for cases where refunds are held up due to various reasons. Taxpayers receive an email notifying them of an upcoming call from a specific number, during which the issues are addressed. Over the past year, this Mysuru-based call center has resolved 1.4 lakh entries, allowing taxpayers to either accept the demand or contest it.
Call center expansion and reasons for refund delays
Initially, this call center focused on four ranges: Karnataka and Goa, Mumbai, Delhi, and the northwest region. However, plans are in place to expand its services to other regions and cities. Apart from record updates at the department or assessing officer level, two other reasons contribute to refund delays: unvalidated bank accounts due to bank mergers or changes in IFSC codes, and mismatches detected in approximately 35 lakh cases.
Processing rates and ITR-U impact on additional tax collection
Official data for the assessment year 2023-24 shows that out of 7.27 crore ITRs filed, 7.15 crore were verified by taxpayers, and 6.80 crore ITRs were processed by the department. This amounts to a processing rate of 93.5% for duly verified ITRs. Additionally, the introduction of ITR-U (income tax return-updated) in Budget 2022-23 has led to the collection of Rs. 1,300 crore in additional tax from 16.8 lakh returns filed during the current financial year.
New tax regime adoption and direct tax collection estimates
Gupta noted that 60% of corporate profits were filed under the new tax regime during the last fiscal year, and he expects 60-70% of individual taxpayers to adopt the new system. As of now, the department has collected Rs. 9.57 lakh crore in net revenue after issuing Rs. 1.50 lakh crore in refunds during the ongoing fiscal year. The department is confident it will surpass budget estimates for direct tax collections by March 2024.
