Budget Proposals -2023 Series: Asking Questions and Finding Answers [Part VII]
Interest on delayed Refunds [Section 56]
This blog is one of a series of topic-specific FAQs concerning Budget 2023 proposals. It addresses the practical issues raised due to proposed changes.
Vivek Laddha, Manish Gupta, Pooja Patwari
FAQ 1. What is the background of proposed amendment in section 56?
Law Brothers’ View: There is an explicit provision of granting the 6% interest in case of delay in giving the refund to the applicant of refund. Still, the department has not taken steps in many cases in the application of the provision.
Further in cases where the deficiency memo is issued by the department in RFD-03, the computation of the time limit has been debated as to whether it is to be started fromthe date of filing of the application or the date of the resolution of deficiency. It appears that the amendment is brought to consider this situation.
FAQ 2. What is the new in the amended provision?
Law Brothers’ View:
What is not changed?
- Event of triggering the interest liability on account of exchequer: Delay in refund (i.e. giving the refund after 60 days from the date of application)
- Computation of days for the interest: We do not notice any change in this i.e. Refund shall be computed for the delay period (to be reckoned from 61st day till the date of the refund)
What is the change?
- In our view, the proposed amendment contemplates to provide the manner of computation (What can be the way of computation of interest other than I= P×T×R, where every variable is clear)!!, conditions and restriction in respect of such interest payable.
- For operationalize this provision, the rules will be issued by the government.