HC seeks govt reply on auto TDS refund plea

New Delhi: The Delhi High Court has sought responses from the government, the finance ministry and the Central Board of Direct Taxes on a plea seeking automatic refund of tax deducted at source to individuals who don't owe any income-tax. At present, such individuals are required to file an income tax return (ITR) only to claim the refund.

A bench comprising Chief Justice Devendra K Upadhyaya and Justice Tejas Karia heard the plea on Wednesday and said they would next hear the petition filed by Delhi-resident Aakash Goel on November 6.

Goel urged the court to direct the government to immediately process and credit the unclaimed TDS refunds, specifically targeting those with TDS credits up to ₹5,000 per annum, along with applicable statutory interest, directly into the linked bank accounts of individual PAN holders for each of the past three assessment years, without insisting on the filing of income tax returns.


Highlighting the hardship faced by nearly 23.5 million individuals who have TDS credits but are not otherwise liable to file ITR, Goel in his petition claimed that these individuals are subjected to TDS but later fall outside the tax bracket when various exemptions are claimed, thereby making them liable for TDS refund already deducted by the employer. As of now, such individuals have to file an ITR to be eligible to claim such refund.

He has also asked the government to forthwith implement a permanent automatic TDS refund mechanism for current and future assessment years, whereby individuals whose total income is below the basic exemption limit, specifically targeting those with TDS credits up to ₹5,000 per annum, are automatically identified, and their TDS refund is credited without insistence on return filing. This will also remove the unnecessary procedural requirement of mandatory ITR filing for claiming refunds, he said.