The new income tax bill has proposed that taxpayers will be eligible for a refund only if they file the original return on time.

While filing a belated return is permitted there is a lack of clarity on whether the assessee will be able to claim a refund prompting tax experts to call for a correction of the anomaly before the bill is passed.

Clause 263(1)(a)(ix) of Income Tax Bill, 2025, which was tabled in Parliament on Thursday, stipulates that a person seeking a refund under Chapter XX must file their return of income within the prescribed due date.

Additionally, Clause 263(4) of the bill provides a mechanism for those who fail to meet this deadline, allowing them to file their return within nine months from the end of the tax year.

“A joint reading of both these clauses raises a critical ambiguity, whether a refund would still be granted if the return is filed belatedly beyond the original due date,” said Sandeep Jhunjhunwala, tax partner at Nangia Andersen LLP.

On top of that Clause 433 of Chapter XX, states that every claim for a refund shall be made by furnishing a return as per Clause 263.

“While the overarching intent of the bill is to ensure simplicity, certain provisions, upon closer examination, currently appear to have interpretational ambiguities, which may get ironed out in the subsequent phases of passage of the bill,” Jhunjhunwala said.

Tax advocate Narayan Jain said that the current section 139 of The Income Tax Act, 1961 does not prescribe any such provision. He suggested a review of the “harsh and unjust” provision and allow refund even in the case of furnishing belated returns.

“If an individual fails to file its return within the due date, he will be deprived of his rightful claim of credit for taxes paid by way of TDS, advance tax or self-assessment tax.

“This change is against the principles of natural justice and leads to unjust enrichment of the exchequer, as there is no reason to deny a genuine refund claim on the grounds of a procedural lapse. Hence, the government needs to relook at the proposed change,” said Riaz Thingna, partner-tax, Grant Thornton Bharat.

“The new income tax code introduces a significant requirement under Section 263(1)(ix), mandating thattaxpayers file their incometax returns by the prescribed due date to be eligible for refunds.

“However, Section 433, which governs refunds, does not reference this due date. This creates a potential inconsistency, hence clarity in this regard would need to be watched out,” said Vinita Krishnan of Khaitan & Co.

“This is an anomaly and needs to be clarified, else genuine cases where returns are filed even a few days late, the refunds could be impacted,” said Mehul Bheda, partner, Dhruva Advisors.

“This is completely a new provision and is similar to a few other provisions such as allowability and carry forward of losses,” said Punit Shah, partner, Dhruva Advisors.