Who Should Claim Refund Under the Income Tax Act?

Under the Income Tax Act, 1961, the right to claim a refund depends on who has paid the excess tax and under what circumstances. Here’s a breakdown of who can claim a refund:

1. The Assessee (Taxpayer) Themselves

• Primary claimant: The person who paid the tax (e.g., through TDS, advance tax, or self-assessment) and is entitled to a refund due to:
  • Excess payment compared to actual tax liability.
  • Income being non-taxable (e.g., income below exemption limits).
  • Errors in TDS deduction (e.g., higher deduction due to incorrect PAN or slab rates).
• Process:
  • File ITR(if return-filer) → Refund is processed automatically.
  • For non-return filers (e.g., TDS on non-taxable income), submit Form 30to the Assessing Officer (AO) with proof (e.g., Form 16A, bank statements) .

2. Legal Heirs/Representatives

• If the original taxpayer is deceased, insolvent, or incapacitated, the refund can be claimed by:
  • Legal heirs (with succession certificate or will).
  • Court-appointed representatives (e.g., for minors/lunatics).
• Documentation: Death certificate, legal heir certificate, or probate may be required .

3. Persons Other Than the Assessee (Section 238)

• Clubbed income cases: If income was clubbed under someone else’s return (e.g., spouse’s income under Section 64), the actual earnercan claim the refund.
• Example:
  • A wife’s income was included in her husband’s return, but excess TDS was deducted from her salary. She (not the husband) can claim the refund.

4. Third Parties in Special Cases

• Tax deducted at source (TDS) on behalf of others:
  • Example: A contractor deducts TDS from subcontractors but later finds they were exempt. The subcontractor (not the contractor) must claim the refund.
• Agents/Employers: If an employer deducts excess TDS from an employee, the employee(not the employer) claims the refund.

Who Cannot Claim a Refund?

• A person who did not bear the tax burden(e.g., a company cannot claim refunds for TDS deducted from employees’ salaries).
• Refunds withheld under Section 241A(pending scrutiny) until the assessment is complete.

Key Takeaways

For disputes or complex cases (e.g., disputed ownership of income), the Income Tax Department may require additional evidence or a court order.