Scrap Mandatory ITR Filing for Refunds

The Select Committee of Lok Sabha on the Income Tax Bill, 2025, has recommended removing the mandatory requirement to file a return solely for the purpose of claiming a refund.

- DIPAK MONDAL @New Delhi

It argued that this requirement could inadvertently lead to prosecution, mainly for small taxpayers whose income falls below the taxable threshold but from whom tax has been deducted at source.

The panel suggested that the law should not compel a return merely to avoid penal provisions for non-filing. It recommended removal of sub-clause (1)(ix) from Clause 263 to provide flexibility for allowing refund claims in cases where return is not filed by the due date.

Clause 263.1 of the Bill lists the persons and entities who are required to file income tax returns. Clause 263.1 (ix) specifically mentions 'a person who intends to make a claim of refund'.