New Income Tax Bill: Small Taxpayers Must File ITR, Say CAs

The Lok Sabha passed the new Income Tax Bill for 2025,after discussing and including the recommendations of the parliamentary panel consisting of 31 members, headed by Baijayant Panda, BJP (Bharatiya Janata Party) MP.

It has been clear now that late filing of taxes will still be eligible for a refund on the extra taxes paid during a financial year, so the taxpayers who missed the due date of filing ITR (Income Tax Returns) or revised returns are still qualified for refunds.

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The Founder-Director of TaxAaram.com, Mayank Mohanka, points out," The insight that was recorded in the Select Committee Report, saying small taxpayers may no longer be required to file their returns just to claim their refunds, does not hold good. It is because Section 433 of the new Income Tax Bill still mandates that the refunds can only be claimed through a return of income and no other means." Therefore, another suggestion of removing the requirement to file tax returns only for claiming refunds, which would have been a relief to small taxpayers, did not make its way to the new Income Tax Rules.

Many small taxpayers (including senior citizens) with income below the threshold limit are forced to file an ITR only to claim a refund on extra TDS (Taxes Deducted at Source). They can face difficulties if they did not file their returns on time. The committee has suggested that the taxpayers should not be forced by the law to file returns to avoid penalty provisions.

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The report stated that, "For claiming the refund, the current mandatory requirement could unintentionally lead to prosecution, specifically for small taxpayers who paid TDS but their income is lower than the taxable threshold limit. In such cases, the tax laws should not pressure to file a return only to avoid penalties for non-filing."

Section 433 has been employed in the new Income Tax Bill, saying that 'every claim for refund under this part shall be made by preparing a return as per section 263'. This section says that an individual who wants to claim a refund under Chapter XX (that deals with refunds in detail) has to furnish a return for the financial year.

The Chartered Accountant Himank Singla says that, " So, the revised tax rules do not seem to have accepted the committee's suggestion on this count".

New Income Tax Bill: Small Taxpayers Must File ITR, Say CAs

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