If you thought that your income tax refund claim may never be issued, you may soon be pleasantly surprised. This is because in a first of its kind attempt to clear the large backlog of pending returns and refunds, the Central Board of Direct Taxes (CBDT) has instructed field formations to process all returns for the assessment year 2007-08 involving refund claims by 30th September 2008.
The income tax department is on a special drive to clear the large backlog of unprocessed returns from two years ago. In an internal communication to its field officers, it has expressed concern over the slow progress in processing returns and issuing refunds has spelled out a strategy to speed up the procedure.
?The number of returns processed has not shown any significant improvement and a large number of electronic returns for AY 2007-08 as also refund claims are still pending for processing,? it has noted in its communiqu?.
?All pending returns for AY 2007-08 involving refund claims (including electronic returns with refund claims) must be processed on priority basis by 30th September,? the CBDT has said.
As part of its strategy, the board has asked its officers to tap into the department?s online databank for all necessary information and use the help of its directorate of information technology. However claims above a certain limit or where scrutiny is pending will be settled later.
In 2006-07, about 25 million returns were filed, of which a majority remains unprocessed. The CBDT had in June this year carried out a similar review and to ensure faster refunds had relaxed certain criteria.
Accordingly, for settling the income-tax refunds, TDS certificates like Form 16 or challans will not be verified for tax assessees whose tax is deducted up to Rs 5 lakh and who have filed refund claims up to Rs 25,000.
While tax officials concede that a lot of refund claims remain unsettled, the department is trying to address the issue.
So far this fiscal, it has already issued refunds over Rs 18,000 crore. Similarly in 2007-08, over 48.5 lakh refunds were issued involving an amount of about Rs 41,100 crore, as against 32.5 lakh refunds involving an amount of about Rs 28,500 crore issued three years earlier (fiscal2004-05).
To facilitate faster issuance of refunds, the CBDT has also initiated the Refund Banker Scheme where in a scheduled bank is authorised to issue refund instruments on behalf of the income-tax department.
Refunds are electronically issued by the State Bank of India within three working days upon receiving the refund claim from the income-tax department.
Stressing upon the need to settle such claims speedily, finance minister P Chidambaram had earlier said, ?Refunds are as important as tax collections. They are a key element in improving collections. Quicker and transparent refund processes would lead to better and more efficient collection processes.?