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Income tax department on quick refund adjustments

Updated: Nov 30, 2023

The Income Tax Department has reduced the period to 21 days for tax officers to decide on adjustments of refund against outstanding tax dues so as to avoid litigation. Originally, the time period was 30 days. Assessing officers are now liable to provide feedback on whether the adjustments will be made or not within 21 days of a taxpayer’s complaints.


The change was made as the Centralized Processing Centre (CPC) noticed categorization of such demands as “correct and collectible “ or a lack of feedback from the Assessing Officer on the client's response, resulting in incorrect adjustments of refunds to outstanding tax dues, which led to needless litigation, said AMRG & Associates Senior Partner Rajat Mohan.


"If the assesses either does not agree or partially agrees for adjustment, the matter shall be referred by CPC immediately to the assessing officer, who shall, within 21 days of such reference, provide feedback to CPC as to whether the adjustment should be made or not," Rajat Mohan added. In order to make refund adjustments quick the Income Tax Department has taken this step. By making Assessing Officer liable to give feedback on whether refund adjustments will be made or not within 21days will make the process of refund adjustment quick. Furthermore, there will be no misclassification by the department, and there will be no panic among the taxpayers and fewer complaints and litigation. So, this is a sign of relief for taxpayers because, under Section 245, taxpayers will be notified about an adjustment of their refund to their outstanding dues sooner than it used to be. If taxpayers disagree, he/she can escalate their dispute on valid grounds.


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