INSTRUCTIONS FROM THE CBDT ABOUT THE PROCESS OF REFUND CLAIMS AND RETURNS
Several returns that were otherwise legitimately filed under sections 139, 142, or 119 of the Income-tax Act, 1961 for various assessment years up to the assessment year 2017-18 could not be processed. As a result, the taxpayer is unable to receive his legitimate refund in accordance with the Act’s provisions, despite the fact that the delay is not his fault. To address the concerns of such taxpayers, the Board had previously issued instructions/orders under section 119 of the Act, which relaxed the prescribed statutory time limit for processing legally filed returns with refund claims in non-scrutiny instances. According to a previous directive dated July 10, 2020, a deadline of October 31, 2020, was set for processing such returns with refund claims.
The subject has been re-examined by the Board in light of ongoing taxpayer complaints about refunds. By virtue of its authority under section 119 of the Act, the CBDT hereby relaxes the time limit set forth in the second proviso to section 143’s subsection (1). With the prior administrative approval of Pr.CCIT/CCIT concerned, all legally submitted returns up to the assessment year 2017-18 with refund claims can now be handled. By 30.09.2021, an intimation of such processing is conveyed to the assesses concerned.
The following returns are not exempt from the relaxation:
(a) returns that have been scrutinized;
(b) where demand is shown as payable in the return or is expected to arise after processing it,
(c) returns remain unprocessed for whatever cause attributable to the assessee
THE RESERVE BANK OF INDIA HAS LOWERED INTEREST RATES ON UNCLAIMED FIXED DEPOSITS
The interest rate guidelines for fixed deposits have been changed by the RBI (FD). The bank will pay reduced interest on the matured amount if the fixed deposit matures and the proceeds are unpaid and lying with the bank, according to the new rule. The amount that is not claimed will be subject to the savings account interest rate or the negotiated rate of interest on the matured FD, whichever is lower. This allowed banks to provide savings account interest rates on outstanding FD amounts that had not been claimed.
Fixed deposit investments can be made at any bank. All scheduled commercial banks (including regional rural banks), small finance banks, local area banks, main (urban) co-operative banks/district central co-operative banks/state co-operative banks will be affected by the RBI notification. The majority of investors typically invest in fixed deposits with auto-renewal options. In such circumstances, the new rule does not apply, and banks will pay the current interest rate on the date of renewal.
Depositors also open a fixed-income account at the same bank as they hold a savings account. As a result, when the FD matures, the bank deposits the funds immediately into their savings account. In such instances, the amendment is not relevant, and the investor will earn interest on the savings account.
However, if the investor simply has fixed deposits with the bank and no auto-renewal option, he or she must give the bank instructions for the receiving of FD maturity funds. If the investor fails to do so, the bank will pay interest on the overdue fixed deposits at the lower of the appropriate savings account rates or the current contracted FD interest rates.
As a result, the investor can still collect interest on unclaimed fixed deposits under the new law. If the current contracted FD interest rates are less than the appropriate interest on the savings account, the investor must absorb the loss. To be on the safe side, investors should now open a savings account with the bank where their FDs are held or request the banks to renew their FDs automatically.