The Income Tax Department has recently issued a circular reducing the time limit for claiming a refund from six years to five years.

This means that a refund for an old return can now be claimed up to five years after the last date of filing the return for that financial year. Previously, taxpayers had six years after the last date of filing the return to claim a refund. The government has issued this circular to reduce the backlog of refund cases.

The Ministry of Finance has reduced the time limit for making an application for compensation or set-off of losses, or for carrying forward or claiming a refund under section 119(2)(b) of the Income Tax Act.

In this regard, all the circulars issued earlier by the Central Board of Direct Taxes regarding the condonation of delay have been cancelled, which allowed taxpayers to claim a refund after 6 years with delay.

Taxpayers will now need to complete the details with greater accuracy to claim the refund. They will also need to strictly follow the related rules. Previously, taxpayers were allowed to claim the refund even after some delay.

Therefore, by reducing the deadline for filing a refund claim, more responsibility is placed on the taxpayer. This decision is also believed to make the work of the Income Tax department more effective and efficient. 

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