Income Tax Department Plans to Reduce Refund Processing Time to 10 Days Starting this Fiscal Year

The revenue department is getting ready to introduce a system that aims to reduce the average time taken to process and issue tax refunds from the current 16 days to a mere 10 days, as reported by a newspaper. What's even more significant is that this new timeline is anticipated to be put into effect within the ongoing fiscal year.

"In the fiscal year 2022-23, it took about 16-17 days on average to process tax returns. This duration was around 26 days in the preceding year, 2021-22. Our aim now is to reduce the time for processing tax returns to 10 days while simultaneously issuing refunds," a government official stated as reported by Business Standard.

From April 1 to August 21, tax refunds amounting to Rs 72,215 crore have already been issued, out of which Rs 37,775 crore went to companies and Rs 34,406 crore to individuals. 

The report also mentioned that the total collection of direct taxes, which includes both personal income tax and corporate tax, reached Rs 6.6 lakh crore.

Advancements in technology and a strong system are speeding up the processing of tax returns. Last year, the percentage of processed tax returns increased significantly. 

Based on ongoing trends, officials are optimistic that this year, the processing time could further shorten, leading to quicker refund issuance.

The income-tax department has embraced electronic methods for verifying and assessing tax returns. This involves an anonymous back office managed by tax experts and officials, eliminating direct personal interactions between taxpayers and officers.

Furthermore, officials are striving to issue refunds promptly once tax returns are processed. This marks a shift from the previous approach of withholding refunds for companies to boost revenue collection.

The tax department is actively engaged in enhancing the system to achieve the aim of delivering refunds to taxpayers within 24 hours. Currently, about 10 percent of returns are processed and refunds are issued within three to four working days. Officials are optimistic that this accelerated refund process will become the norm in the coming years.
 

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