Income Tax Bill proposes Bar on Claiming Refund if ITR filed after Due Date:

Income Tax Bill proposes Bar on Claiming Refund if ITR filed after Due Date The New Income Tax Bill 2025 was tabled in Lok Sabha on 13th Feb 2025, which goes into effect on April 1, 2026. The Bill represents a significant revision of the existing tax system. It consists of 536 clauses, 16 schedules, and 23 chapters that introduce significant changes to streamline and modernize tax administration. Redundant provisions were removed, and difficult clauses were rephrased for clarity. Not only the redundant clauses were removed but the bill made crucial changes in the existing Income Tax Act 1961. The income tax bill 2025 proposes a certain bar on claiming refund if ITR filed after due date. Under Income Tax Act, 1961, there's no bar on claiming a refund solely because the return wasn't filed on time. However, the Income Tax Bill 2025 proposes a new rule that there will be no refund if income tax return is filed late. In the New Income Tax Code 2025, the return of income section mentioned that, "(ix) a person who intends to make a claim of refund under Chapter XX." To be specific, clause (ix) under ‘Section 263(1)(a)’ of the new Bill mandates that a taxpayer who intends to claim a refund, is required to file their Income Tax Return (ITR) within the “due date” (the date of the financial year immediately succeeding the relevant “tax year”). However, 'Chapter XX' of the new Bill dealing with refunds provides for interest on refunds even when returns are filed "outside of the due dates". Experts says, there is no restriction on claiming a refund in a revised or belated tax return, as opposed to an updated return, under the new Bill. According to the new Bill, the deadline for filing returns by company and person (whose accounts must be audited) is October 31, and for individuals it is July 31. Chapter XX appears to be in conflict with Section 263 of the new Bill. Under the current law, the Income Tax Act of 1961, people can receive refunds even if they file late income tax returns. The new bill, however, appears to limit this eligibility by potentially prohibiting refunds for returns filed after the deadline. This could have a negative impact on genuine taxpayers who, for valid reasons, are unable to file their returns within the deadline.