Income Tax: No time limit for filing ITR for TDS refund? Details here

A parliamentary committee has proposed that individuals can claim tax deducted at source (TDS) refunds by filing income tax returns even after the usual deadline without facing penalties.

New Delhi: Individuals who pay taxes should be able to claim tax deducted at source (TDS) refunds by filing income tax returns even after the usual deadline, without facing any penalties. This suggestion was made by a parliamentary committee that is looking at the new income tax bill.

The committee also said that donations made secretly or anonymously to religious and charitable trusts should not be taxed. A Select Committee was formed under the leadership of BJP MP Baijayant Panda to review the Income Tax Bill-2025.

Panda presented the committee's 4,575-page report in the Lok Sabha on Monday. The committee has proposed changes to the Income Tax Bill, 2025. This bill will replace the Income Tax Act, 1961, which has been in use for over six decades. A 31-member panel suggested that the law should be made clearer regarding the taxation of anonymous donations to non-profit organizations (NPOs), especially those that focus on charitable work.

The committee opposed the idea of taxing the 'receipts' of NPOs, as it goes against the principle of taxing real income as outlined in the Income Tax Act.

They recommended bringing back the word 'income' to ensure only the net income of NPOs is taxed. The committee noticed a big difference in how anonymous donations are treated by registered NPOs. They suggested that both religious and charitable trusts should not be taxed on such donations.

There was a major issue with religious and charitable trusts: "While the stated goal of the Bill is to make things simpler, the Committee believes that there has been a big mistake regarding religious and charitable trusts, which could have a major negative effect on a large part of India's NPO sector," said the panel.

Clause 337 of the Income Tax Bill, 2025, plans to charge a 30% tax on secret donations received by all registered NPOs, with very few exceptions for NPOs set up for religious purposes.

This is quite different from the current Section 115BBC of the Income Tax Act, 1961.

The existing law allows more exemptions. According to that, if a trust or institution is created only for religious or charitable reasons, secret donations are not taxed. These organizations usually receive contributions through traditional ways (like donation boxes), where it is hard to find out who the donor is.

"The Committee strongly recommends bringing back a provision similar to the one in Section 115BBC of the Act of 1961," the parliamentary panel report said.

Regarding the refund of TDS claims for individuals who don’t usually need to file tax returns, the committee suggested that the provision in the Income Tax Bill requiring taxpayers to file returns within the due date should be removed.