Eligibility and procedure: 

An assessee is entitled to claim a refund of tax if the tax actually paid (and not merely payable) by him or on his behalf for any assessment year exceeds the amount of tax with which he is properly chargeable under the Act for that year. This may arise usually as a result of excess deduction of tax at source from salaries, dividends, interest, to or as a result of excess payment of advance tax when the tax originally paid on assessment is reduced on appeal, revision, rectification or reference. Where such a claim or refund is made, the assessee cannot question the correctness or validity of the assessment or any other matter related thereto which has become final and conclusive. He is also debarred from asking for a review or revision of the assessment [Sections 237 and 242].

In case where the payer of income from salary, dividend, interest or other sum has wrongly deducted tax at source and paid the same to the credit of the Central Government, then it is the payer of the income who wrongly deducted tax (and not the recipient) who will be entitled to claim the refund provided that the recipient is neither taxable on the gross income nor entitled to credit in respect of the tax deducted. Where the tax payable by an u nregistered firm
is recovered from its partners the tax should be treated as having been paid by the firm and consequently, the application for refund must be made by the firm and not by the partner from whom the tax was recovered. In respect of tax free income (i.e. where salary, annuity, interest etc. is paid tax free) the amount of tax is included in the recipient‘s total income by adding it to the net income received; since the tax in such cases is deemed to have been deducted and paid on behalf of the recipient of the income, he would be entitled to claim a refund if the tax so paid is in excess of the amount with which he is properly chargeable.

Where the value of fringe benefits provided or deemed to have been provided by one employer is included under any provisions of Chapter XII-H in the value of fringe benefits provided or deemed to have been provided by any other employer, the latter alone is entitled to a refund under this Chapter in respect of such fringe benefits.

Generally, a claim for refund can be made only by the person on whose account the tax was already paid. But in cases where the income of one person is included in the total income of another person under sections 60 to 65, the latter person alone is entitled to claim the refund. If any person is not able to claim or receive the refund due to him on account of his death, mental incapacity, insolvency, dissolution, liquidation, etc., his legal representative or trustee, guardian liquidator or receiver, the case may be, is entitled to claim or receive the refund on behalf of such person [Section 238].

All claims of refunds should be made in the prescribed form (Form No. 30) and verified in the prescribed manner in accordance with Rule 41 of the Income-tax Rule and shall be accompanied by the return of income except in cases where such a return had already been filed. The requirements of the Rule are mandatory in nature and if an application or refund is not in compliance with the requirement of the Rule, it would be invalid and consequentl y will not be entertained. The claim for refund should be supported by the certificate of tax deducted at source. The claim may be presented by the claimant in person or through a duly authorised agent or may be sent by post.

The time-limit for making application for refund is one year from the last day of the relevant assessment year. This applies for a claim in respect of fringe benefits also [Section 239].

The Court has no power to extend this period of limitation in any case. This period of limitation would not, however, apply to cases where a refund becomes due to the assessee as a result of an order in appeal, reference, revision or making any reassessment; but in cases where the refund is due to the assessee on the basis of the completed regular assessment, the assessee may file a suit for the refund due to him if it is not granted on his application or he may file a petition for a writ of mandamus to compel the Department to make the refund. Where the refund becomes due to the assessee as a result of an order passed in appeal, reference, revision or rectification, he need not make an application to claim the same. In such a case, the Assessing Officer is bound to pass an order of refund without waiting for the application from the assessee Where, by the order aforesaid an assessment is cancelled and an order of fresh assessment is directed to be made the refund shall become due only on the making of such fresh assessment Where the assessment is annulled the refund shall become due only of the amount of tax paid in excess of the tax chargeable on the total income returned by the assessee [Section 240].