Income Tax Bill 2025: Refund won't be issued if income tax return is filed after the due date? Check details

ITR filing 2025: The Income Tax Bill 2025 has reportedly tweaked the taxpayers’ ability to claim refunds on their Income Tax Returns (ITR) if filed after the due date. According to reports, the bill indicates that individuals who file late will no longer be eligible for refunds, contrasting the current provision under the Income Tax Act, 1961. 

This shift would mean that taxpayers will lose the opportunity to receive refunds if they submit their return after the due date, instead of the current deadline of December 31 in the assessment year. 

Experts on social media are voicing concerns about the potential elimination of refunds for late filers under the new income tax bill, set to be implemented in the financial year 2026-27.

Online tax guide Tax Guru asked a query on X: "Under Income Tax Act, 1961, there's no bar on claiming a refund solely because the return wasn't filed on time. However, the Income Tax Bill, 2025 proposes a new rule: no refund if return is late."

In a reply to this, the Income Tax Department clarified that there are no changes in refund provisions. The I-T department has stated that individuals seeking refunds under Chapter XIX of the Income Tax Act, 1961, are required to submit an income tax return under Section 239. This requirement will be included in Section 263(1)(ix) of the bill.

“Dear @taxguru_in, As explained in our FAQs (link below), there are no policy changes in the provisions related to Refunds in the new Income Tax Bill, 2025,” the Income tax department posted on X.

 

What do the FAQs for Income Tax Bill 2025 say

Chapter XV of the bill is structured into two parts: Part A focuses on PAN while Part B addresses filing the return of income.

The proposed section 263(1)(a) of the Bill outlines the different categories of assessees required to file income returns.

Currently, these assessees are spread out across various sub-sections under Section 139 of the Income Tax Act, 1961. However, in the proposed income tax bill, all assessees are consolidated in one place, simplifying the process for each category of assessee to locate and meet their return filing responsibilities.

Have the due dates for filing returns of income changed?

No, the due dates for filing income returns for each category of assessees remain unchanged. They have now been conveniently arranged in a tabular format for better clarity.

Have the provisions for belated, revised, and updated returns changed?

The provisions for belated, revised, and updated returns have not been altered and continue to align with the Income Tax Act of 1961 (including amendments proposed via the Finance Act, 2025).

What do experts say

According to a report from RSM Astute Consulting, a tax advisory firm, the Income Tax Act of 1961 does not include any provisions restricting an assessee from claiming a refund solely due to a late filing of income tax returns.

It noted: “The Income Tax Bill, 2025, introduces a specific subsection that expressly disallows an assessee from claiming a refund if the return of income is not filed within the prescribed due date. It needs to be seen if this is an inadvertent mistake and whether any changes are made to this provision before the bill is legislated." 

According to Vivek Jalan, Partner at Tax Connect Advisory Services LLP, the proposed Clause 263(1)(a)(ix) of The New Income Tax Bill 2025 mandates that individuals seeking refunds under Chapter XX must submit their Income Tax Returns by the "due date."

This differs significantly from the current provisions of the Income Tax Act 1961, where individuals could file belated returns until December 31 of the assessment year and still claim any refunds owed to them. 

He further told the Economic Times: “On top of that, Clause 433 requires that a refund should be sought only while filing a return. Such a provision would create a hardship for individual taxpayers who miss the due dates due to genuine reasons. In such cases, even in case excess TDS is deducted they can be barred from claiming refunds.

“The requirement to claim a refund through a return filing has always existed under Section 239 of the Income Tax Act, 1961, and will now be reflected in Section 263(1)(ix) of the new bill. The bill only reinforces the requirement to file a return for refund claims and does not introduce any new restrictions,” said Abhishek Soni, CEO and Co-founder of Tax2win.

Claiming refunds under Sec 237 of Income Tax Act 1961

As outlined in Section 237 of the Income Tax Act 1961, individuals who can demonstrate to the Assessing Officer that they have paid more tax for a particular assessment year than what is owed under the Act are eligible for a refund of the excess amount. This refund can be obtained by timely filing the Income Tax Return (ITR) as per Section 139. The deadline for filing a normal return for individual taxpayers was 31st July, while a belated return could be filed under Section 139(4) until 31st December of the relevant assessment year according to the Income Tax Act.

As per section 234(F) of the I-T Act, 1961, individuals who submit their income tax return (ITR) late will incur a penalty of Rs 5,000. However, if their annual taxable income is below Rs 5,00,000, the penalty will be reduced to Rs 1,000. This rule applies even if the individual submits a belated ITR claiming zero tax liability.