If you were banking on your income tax refund for 2006-07 to take care of your investment needs or meet liquidity requirements, then there is no immediate hope in sight with the government yet to develop a software to process your returns.
While the finance ministry launched the new multi-page tax returns form in May this year, it is yet to develop a software to process the information. "Work is going on and developing it is not going to take much time," said an official.
Software apart, the short-staffed income tax department is yet to complete processing refunds for 2005-06 (remember you filed returns in July 2006). But there may be some good news on this front if you are an individual seeking up to Rs 25,000 refund.
The Central Board of Direct Taxes last week asked its officers to ensure that demand for refunds up to Rs 25,000 are processed by the end of the month, while the others too are expedited and completed by end of November instead of the earlier deadline of December.
Till the end of August, officials said, around 20 lakh applications had been processed and individuals had been refunded around Rs 4,300 crore that they had paid as excess tax. During the last financial year, the government processed around 44 lakh such cases and paid Rs 3,000 crore in refunds to individuals.
"Compared to previous years, the tax department has been doing a better job in processing refunds," claimed an official though there were a large number of individuals who were yet to get their dues.
But there is bad news for the corporate sector with the income tax department deciding to set off the fresh demands raised by officials during the current financial year against the refunds claimed by the companies for 2006-07.
Of the Rs 20,195 crore pending refunds at the start of the financial year, around Rs 10,500 crore has been refunded so far, said an official. But it's only later that he reveals that at least 50% of the refunds pertain to 2005-06 and not 2006-07. So the pending refunds for last year are close to Rs 15,000 crore.
"Not all companies are affected. It is mainly those who have claimed tax benefits under one section or another," said an official.
Like individuals, the government's latest move has upset the calculations of many companies too which were under the impression that introduction of e-filing was going to speed up processing and refunds.