ITR Refund: The hassle of filing ITR will end! Money deducted as TDS will be refunded by filling just one form..

If your income is less than the taxable limit but for some reason Tax Deducted at Source (TDS) has been deducted, then you have to file Income Tax Return (ITR) to get your deducted money back, i.e., refund. But now the government is preparing to give relief to such taxpayers who do not have to pay tax. The government is bringing a new, easy system in which such taxpayers will be able to claim a refund by filling a simple form. The Select Committee on Income Tax Bill 2025 has suggested this. A senior government official associated with the matter said that this step has been taken to save small taxpayers from unnecessary legal hassles.

The Income Tax Bill was introduced in Parliament on 13 February 2025, and it is likely to come into force from 1 April 2026. The Select Committee on Income Tax Bill believes that making it mandatory to file an ITR for a refund may inadvertently create a case against small taxpayers. If a person's income is less than the taxable limit and TDS has been deducted, then he should not be forced to file a return just to avoid a penalty.

Two other members of the committee said that the Central Board of Direct Taxes is preparing a new system in which a refund can be claimed by a simple form instead of a return. This process will be linked to Form 26AS, which gives consolidated information of TDS and tax collection.

How will it be different from the current rule?

According to the current laws, if a person's income is not taxable but TDS is deducted from his bank interest or salary, then he has to file an ITR. Penalty is also imposed in case of delay. The committee has suggested simplifying this process. In the new provision, the obligation to file ITR will end.

For example, in the new tax system, if a person's annual salary is ₹ 12.75 lakh but he has not submitted tax exemption related documents, then the employer deducts TDS. In such a situation, he has to file a return to get a refund. Now this process can be easier.

Provision of access to digital devices and data
The new Income Tax Bill has a provision to allow tax officials access to digital devices. There was a lot of debate on this, but the committee has recommended increasing accountability in this. The bill also talks about giving the right of tax audit only to Chartered Accountants (CA). There was a demand to give this right to some other professionals, but the committee did not agree to it.

Relief to non-resident Indians too
The committee has also given relief to non-residents who have liaison offices in India. Now they will have to give the relevant information to the Income Tax Officer within 8 months instead of 60 days after the end of the tax year.

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