New I-T Bill: No ITR filing exemptions for small taxpayers, late filers can claim refunds

Hans India

a day ago

New Delhi: The new Income Tax Bill, 2025, passed by the Lok Sabha, clarifies that late-return filers are eligible for refunds on excess taxes deducted in a financial year.
Analysts said on Tuesday that the bill was missing the proposal to eliminate the requirement for small taxpayers to file returns just to claim tax refunds.
The new I-T Bill kept section 433 intact, which required that 'every claim for refund under this part shall be made by furnishing a return as per section 263'. So, effectively, the law still requires a return of income to claim a refund, with no alternative methods allowed.
Taxpayers who file late or revised returns after the due date will still be eligible for refunds, the new bill suggested.
Small taxpayers, including senior citizens, must file returns solely to claim a refund for excess taxes deducted at source (TDS), even if their income is below the basic exemption threshold.
The committee had recommended that taxpayers should not be required to file a return just to avoid penalties. 'The current mandatory requirement solely to claim a refund could inadvertently lead to prosecution, particularly for small taxpayers whose income falls below the taxable threshold but from whom tax has been deducted at source. In such scenarios, the law should not compel a return merely to avoid penal provisions for non-filing,' the parliamentary panel had earlier suggested.
Preeti Sharma, Partner, Global Employer Services, Tax and Regulatory Services, BDO India, said, "The biggest advantage of the new law is that the common man may easily understand it with lesser efforts as compared to the old law. The revised bill has incorporated most of the changes recommended by the Select Committee. Taxpayers still have to undergo the process of assessing the right regime to follow while filing a tax return. Similarly, no changes are proposed in tax rates as introduced in Budget 2025."
The new bill was passed, incorporating the recommendations of a 31-member parliamentary panel led by BJP MP Baijayant Panda.