Pointing to the legal provision, the Central Board of Direct Taxes said the law allows taxpayers to make a representation before adjusting the refund with an earlier demand.
“The taxpayer is required to agree, disagree or clarify the status of the demand. Accordingly, taxpayers with existing demand(s) in the previous years are being intimated of the same.
“This is a taxpayer friendly measure where an opportunity is being provided in line with principles of natural justice,” the department said in a social media post.
It then went on to urge taxpayers to avail of the opportunity and respond to the message from the department to “enable cleaning up/reconciliation of pending demands and facilitate timely issue of refunds”.
In the past there have been several instances where the tax authorities have simply gone ahead and adjusted the refund claimed against previous dues. The post saw several individuals point to their refunds remaining pending for a long time, including some who claimed that even for previous years they were awaiting a communication from the tax department.
So far, for the assessment year 2023-24 (FY 2022-23), nearly 7.1 crore returns have been processed with more than 2.7 crore cases in which refunds have been issued. “The emphasis is on speedy processing and quick issue of refunds,” the tax department said.