Sections 237, 238 and 239 of Income-tax Act, 1961: Refunds, Special Cases and Claim Procedure

Sections 237, 238 and 239 formed the core statutory rules governing entitlement to an income-tax refund, the person entitled to receive a refund in special cases, and the manner of making a refund claim under Chapter XIX of the Income-tax Act, 1961.

Current law from 1 April 2026: The Income-tax Act, 2025 came into force on 1 April 2026 and repealed the Income-tax Act, 1961, subject to the repeal and savings provisions in section 536. The corresponding refund provisions are now sections 431, 432 and 433 of the Income-tax Act, 2025. The 1961 Act nevertheless continues to apply to proceedings and tax years preserved by the transition provisions.

Income-tax Act, 1961	Subject	Income-tax Act, 2025
Section 237	Refund of excess tax	Section 431
Section 238	Person entitled in special cases	Section 432
Section 239	Claim for refund through return	Section 433

Section 237 of Income-tax Act, 1961 - Refunds

Meaning: Section 237 gives a person a substantive right to a refund where tax paid by or on behalf of that person, or treated as paid by or on behalf of that person, for an assessment year exceeds the amount properly chargeable under the Act for that year.

If the person satisfies the Assessing Officer that the tax paid or treated as paid exceeds the amount properly chargeable for the relevant assessment year, the excess is refundable.

In practical terms, excess tax may arise from tax deducted at source, tax collected at source, advance tax, self-assessment tax, tax paid on assessment, or a later determination that reduces the tax legally payable.

Section 238 - Person entitled to claim refund in certain special cases

Section 238 identifies who may claim or receive a refund where the person connected with the tax payment is not the person who should receive the refund.

Income included in another person's total income

Where the income of one person is included under the Act in the total income of another person, the person in whose total income the income is included is entitled to the refund in respect of that income.

Death, incapacity, insolvency, liquidation or other cause

Where a person cannot claim or receive a refund because of death, incapacity, insolvency, liquidation or another cause, the legal representative, trustee, guardian or receiver, as applicable, may claim or receive the refund for the benefit of that person or the person's estate.

Historical provision: The 1961 Act also contained section 238(1A) concerning fringe benefits under the former Chapter XII-H. That provision reflected the earlier fringe benefit tax regime and is not reproduced in section 432 of the Income-tax Act, 2025.

Section 239 - Form of claim for refund and limitation

For the 1961 Act framework applicable to the relevant saved years and proceedings, section 239(1), as amended with effect from 1 September 2019, provides that a claim for refund under Chapter XIX is made by furnishing a return in accordance with section 139. The former sub-section (2) stands omitted.

This means the ordinary refund claim is integrated with the return of income rather than being made through the old standalone refund claim procedure.

Current corresponding law under Income-tax Act, 2025

Section 431 - Refunds

Section 431 substantially carries forward the principle of old section 237. If tax paid by or on behalf of a person, or treated as paid by or on behalf of that person, for a tax year exceeds the amount properly chargeable under the 2025 Act for that year, the person is entitled to refund of the excess.

Section 432 - Special cases

Section 432 provides that where one person's income is included in another person's total income, the latter is eligible for the refund relating to that income. It also permits the legal representative, trustee, guardian or receiver to claim or receive a refund where the person otherwise entitled cannot do so because of death, incapacity, insolvency, liquidation or another cause.

Section 433 - Claim for refund

Section 433 provides that every claim for refund under Chapter XX of the Income-tax Act, 2025 shall be made by furnishing the return in accordance with section 263 of that Act.

Which Act applies after 1 April 2026?

Section 536 of the Income-tax Act, 2025 contains the repeal and savings rules. The repeal does not erase rights, liabilities or proceedings arising under the 1961 Act. In particular, the 1961 Act continues to apply to proceedings relating to a tax year beginning before 1 April 2026 where the savings provision so requires. For tax years governed by the new Act, the refund provisions in Chapter XX of the Income-tax Act, 2025 apply.

Practical refund points

Check that the return correctly reports TDS, TCS, advance tax and self-assessment tax credits.
Complete verification of the return; refund processing ordinarily follows a valid and verified return.
Keep the bank account intended for receipt of refund validated on the e-Filing portal.
If an issued refund fails, use the official refund reissue facility on the e-Filing portal.
For an older year or a delayed claim, check the applicable statutory and condonation provisions before filing.

Official resources

Updated: 29 September 2026. This article is intended as a statutory reference and general information. For a particular assessment or tax year, the applicable Act, Finance Act amendments, rules, notifications, circulars and transition provisions should be checked.