Tax refunds held up due to wrong Permanent Account Numbers

Wrong PANs slow down tax refunds

Even as Income Tax department fast-tracks tax refunds due to assesees this year, several cases are held up as the Permanent Account Numbers have turned out to be wrong or have not been filled in at all.

  • New Delhi,  June 6, 2011  
  • |  
  • UPDATED   16:25 IST

While the Income Tax (I-T) department has fast-tracked tax refunds due to assesees this year, several cases have been held up as the Permanent Account Numbers (PANs) have turned out to be wrong or have not been filled in at all.

"Around 80 per cent of the tax refund cases in Delhi have already been cleared this year while most of the remaining cases have been held up as the PANs have been either wrongly quoted or not quoted at all," a senior I-T official told Mail Today. According to him tax payers need to take more care to ensure that the PANs entered in their tax returns and AS-26 statements are correctly entered.

A taxpayer becomes eligible for a refund if the tax paid by him or her exceeds the tax amount that was due in the year. The refund process gets initiated with the claim contained in the annual tax returns submitted by the taxpayer, which is then examined by the assessing officer to see if it is actually eligible. The claim is finally disposed off when the voucher is issued to the assessee through an authorised bank.

In order to speed up refunds this year, the Central Board of Direct Taxes (CBDT) had issued instructions to field formations to accept tax deducted at source (TDS) claims in all tax returns (ITR-1 to ITR-6) without verification, if the difference between the amount claimed in the return and the amount reflected in the TDS return (AS-26 statement) does not exceed Rs 1 lakh. Around 95 per cent of the refund cases fall in this category.

Cases where the PANs are incorrect and where the differences exceed Rs 1 lakh, however, are being cleared after due verification. This precaution is considered necessary to avoid refund frauds. All the chief commissioners have been asked to upload the entire data on the department's Website so that assesses can see the status of their refund cases.

Senior officials disclose that since the refund cases have been speeded up this year, the I-T department has been borrowing money from the Reserve Bank of India (RBI) to meet the claims but the situation is expected to ease once the advance tax payments for the current financial year come in during this month.

Although the I-T department has to pay interest on the borrowed money, this is not seen as a major problem as it also has to pay interest to the taxpayers when the refunds are held up. The I-T department has come under criticism from the Comptroller and Auditor General (CAG) in the past for long delays in tax refunds as prompt refunds instill confidence among taxpayers and increase tax compliance. These delays in processing refund claims have also led to the government having to fork out increased amounts as interest on the amounts that have been held up with the I-T department.

According to the latest CAG report, the government has refunded Rs 57,101 crore in 2009-10, which includes interest to the tune of Rs 12,951 crore. The interest works out to as much as 22.7 per cent of the total refund amount. This could have been reduced if the tax administration had been more efficient in processing the refund claims.

The interest on refunds has shown a progressive increase during 2006-10 at a pace that was higher than that of the growth in refunds. In 2008-09, the amount of refunds registered a dip but the interest payments went up, which reflects the long delay in clearing claims during this period.

Courtesy: Mail Today