As complaints of stuck refunds mount, I-T Dept cites high ‘ineligible’ claims, Pg15

Key Highlights:

• The Income Tax Department addressed rising complaints about delayed income tax refunds for the assessment year 2025-26, citing "ineligible" claims.
• Taxpayers were contacted via SMS and email under the NUDGE campaign to rectify errors by December 31, 2025, by filing revised returns.
• As of December 17, refunds were 13.52% lower compared to the previous year.
• Over 15 lakh income tax returns have been revised for AY 2025-26.
• Over 21 lakh taxpayers updated their ITRs for assessment years 2021-22 to 2024-25, paying over Rs 2,500 crore in taxes.

Detailed Insights:

• The Income Tax Department scrutinized high-value deductions and refunds above Rs 50,000, and refunds are expected to reflect within 10 days.
• A revised return can be filed three months before the end of the assessment year, i.e., December 31.
• Updated ITRs (ITR-U) can be filed within 48 months from the end of the assessment year.
• If the updated return is filed during 24-36 months, additional tax payable is 60% of the total tax and interest on additional income, and for 36-48 months, it is 70%.
• The NUDGE campaign identifies discrepancies regarding deductions, especially donations to unrecognised political parties or charitable institutions, mismatches in Tax Deducted at Source (TDS) and Annual Information Statement (AIS), or non-disclosure of foreign assets and income.
• The department uses a risk management framework with advanced data analytics to identify cases involving bogus donations to Registered Unrecognised Political Parties (RUPPs) and other ineligible deductions or exemptions.

Key Concepts Involved:

• Assessment Year: The 12-month period following the financial year, during which income earned in the financial year is assessed for tax purposes.
• Revised Return: A corrected income tax return filed to rectify errors or omissions in the original return.
• Updated Return (ITR-U): A return that can be filed even if the original return was not filed, allowing taxpayers to update their income details.