With 3.5 million tax refund cases currently in a state of delay, the Income Tax (IT) department is contemplating the organization of campaigns to aid taxpayers. Additionally, they are actively exploring alternative methods to expedite the refund processing.
The manual processing of income tax refunds was fraught with challenges in the past. To streamline this, the department transitioned to electronic return issuance in 2011.
Nonetheless, tax officials have identified that inaccuracies in taxpayers’ bank account and permanent account number (PAN) details contribute to the delay in refund disbursements.
Earlier this month, the Chairman of the Central Board of Direct Taxes, Nitin Gupta, informed reporters that the department had been engaging in communication with taxpayers whose refunds were in a state of delay. He emphasized the department’s commitment to swiftly and accurately crediting refunds to the correct bank accounts of taxpayers.
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Approximately a year ago, the department initiated a unique demand management facilitation system to address cases with pending refunds, stemming from various reasons. In this system, taxpayers receive an email notification, and within three days of the email dispatch, they can expect a call from a designated number. Through this conversation, the department works to resolve the issues at hand.
A call centre located in Mysuru is playing a pivotal role in addressing tax refund cases. Notably, in the fiscal year 2023, they successfully resolved over 140,000 refund cases.
Tax experts suggested that the tax department should periodically send reminders to verify bank account details, as this often leads to refund delays. When the PAN is linked to bank accounts, the validation process generally takes only 1-2 days. However, if validation issues persist, taxpayers can raise grievances through the tax portal.
Saurav Sood, Practice Leader for International Tax and Transfer Pricing at SW India, proposed sending notices or emails to taxpayers in cases where refunds cannot be processed due to insufficient information. Additionally, he suggested organizing goodwill campaigns to offer taxpayers an opportunity to seek assistance in expediting their refunds.
As for non-residents lacking Indian bank accounts and facing obstacles in processing refunds to foreign bank accounts, experts propose the exploration of alternative methods for crediting their tax refunds.
In the ongoing fiscal year up to October 9, the Income Tax department has disbursed refunds totalling Rs 1.5 trillion. In the previous fiscal year, FY23, the Income Tax Department distributed refunds amounting to Rs 3.07 trillion.
