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India: Two-year limitation period for nonresidents to submit refund claims not authorized under statute (High Court decision)

Two-year limitation period under Circular No. 7/2007 held inconsistent with statute

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March 3, 2025

The Delhi High Court held that the two-year limitation period for nonresidents to submit refund claims imposed under Circular No. 7/2007 was inconsistent with the authority granted to the Central Board of Direct Taxes (CBDT) under the Income-tax Act, 1961.

The CBDT is authorized under the statute to issue guidelines to accept applications for exemption, deduction, or refund even when the statutory limitation period has expired. The court held that the CBDT could not impose a limitation period when none existed under the statute.

The court also held that interest paid to a nonresident was not taxable in India if the borrowed funds were used exclusively for investment in an overseas subsidiary.

The case is: Sun Pharmaceuticals Industries Ltd v. ITO

Read a March 2025 report prepared by the KPMG member firm in India 

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