Procedures stall income tax refunds

Income tax (IT) assessees and bankers alike are a confused lot these days, as Income Tax Refund Orders (ITROs), diligently dispatched by the...

Income tax (IT) assessees and bankers alike are a confused lot these days, as Income Tax Refund Orders (ITROs), diligently dispatched by the revenue department, are returning unpaid from clearing. Well, don’t jump to the conclusion that the I-T department’s account with the Reserve Bank of India (RBI) doesn’t have any balances. The confusion is mainly attributable to the change in the procedure for issue of ITRO advices.

So, if your ITRO comes back unpaid, don’t be flummoxed. If you or your banker had not followed the prescribed procedure as notified by the Central Board of Direct Taxes in November 2003, then what should normally take no more than a week could take anywhere between a few weeks to a couple of months to get your hard-earned money credited into your account.

The revised procedure requires advices (or notification) with the ITROs (up to Rs 9,999) to be presented by assesses for clearing.

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“More often than not, advices are not received along with the ITROs. Income tax assessees think that the advices are for their record. Hence, they detach them and lodge only the cheque with the bank. When the public accounts department of RBI receives the ITROs without the advices, the cheques are simply returned,” said a senior banker clued into the development.

Corporate assessees, however, do not face this problem as the income tax department dispatches their advices directly to RBI.

“As the I-T department collects details of an assessee’s bank account through the Income Tax Return (Saral) Form, the procedural problem pertaining to the ITROs can be easily overcome if the assessee’s account is directly credited by the department using the electronic clearing service,” Chandravijay Shah, Chartered Accountant, said.

Pending direct credit of refund to an assessee’s account, the front-office staff of banks would do well to caution a customer if he/ she lodges an ITRO for clearing without the advice, he added.