Limitation, Procedure, and Rights of Refund Claims in Indian Tax Law : Clause 433 of the Income Tax Bill, 2025 Vs. Section 239 of the Income Tax Act, 1961

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....ect evolving policy considerations, technological advancements, and the need for administrative efficiency. Clause 433 of the Income Tax Bill, 2025, proposes a new regime for claiming refunds, replacing the existing Section 239 of the Income Tax Act, 1961. This commentary examines the text, objective, and implications of Clause 433, offers a detailed analysis of its provisions, and compares it with the existing Section 239. The analysis also explores the practical, procedural, and legal impacts of these changes. Objective and Purpose The primary purpose of statutory provisions relating to refunds is to provide a structured, fair, and efficient mechanism for taxpayers to recover amounts paid in excess of their tax liability. The process mu....

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....d. 3. Reference to Section 263: The clause refers to section 263, which presumably prescribes the procedure, format, and verification requirements for filing returns under the new Bill. 4. Omission of Limitation Period: Notably, Clause 433 does not specify any separate limitation period for making a refund claim. The limitation is, by implication, tied to the due date and permitted period for filing the return u/s 263.  Interpretation and Legal Principles * Substantive vs. Procedural Law: Clause 433 is procedural in nature. It does not confer a substantive right to a refund but prescribes the manner in which such a right may be exercised. * Exclusivity of Return-Based Claims: The clause appears to e....

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....tion Period: Section 239 originally contained detailed limitation periods, which were subsequently omitted. Currently, both provisions tie the limitation to the return filing deadlines under the relevant section (139 or 263). There is thus a continuity in approach, though the new Bill does not restate the limitation. * Form and Verification: Earlier versions of Section 239 required claims in prescribed forms and verification; this was simplified to a return-based claim. Clause 433 continues this approach, with the procedural specifics left to section 263. * Supplementary or Delayed Claims: Both current Section 239 and Clause 433 do not provide for claims outside the return mechanism. Earlier, Section 239(2) allowed for co....