Section 47

Refund of overpaid tax Repealed by (Finance Act 2022-wef-01-July-2022)

(1) When a taxpayer has overpaid a tax under a tax law the taxpayer may apply to the Commissioner, in the approved form, for a refund of the overpaid tax within one year five years of the date on which the tax was paid.
 Provided that for value added tax the period of refund shall be provided for under the Value Added Tax Act, 2013.   Finance Act, 2016Effective 1 January 2017
(2) The Commissioner may, for purposes of ascertaining the validity of the refund claimed, subject the claim to an audit.
(3) The Commissioner shall notify in writing an applicant under subsection (1) of the decision in relation to the application within ninety days of receiving the application for a refund. Finance Act, 2016Effective 1 January 2017
(4) Where, in relation to an application for a refund made under this section or made under any other tax law, the Commissioner is satisfied that a taxpayer has overpaid a tax, the Commissioner shall apply the overpayment in the following order—
(a) in payment of any other tax owing by the taxpayer under the tax law;
(b) in payment of a tax owing by the taxpayer under any other tax law; and
(c) any remainder shall be refunded to the taxpayer.

(4A)* Where the Commissioner notifies a taxpayer that an application for a refund has been ascertained in accordance with subsection (3), and applies the refund to the payment of an outstanding tax in accordance with subsection (4)(a) or (b), interest or penalties shall not accrue on the amount applied to the payment of the outstanding tax from the date of the notification. (Finance Act 2021- wef-01Jan2022*)

(4B)* For the avoidance of doubt, where the Commissioner has applied a refund to the payment of an outstanding tax under subsection (4A), if there is any outstanding tax after such application, the outstanding tax shall accrue interest and penalties in accordance with this Act. (Finance Act 2021- wef-01Jan2022*)

(4C)* Without prejudice to the provisions of this section, once the Commissioner notifies of a decision under subsection (3) and the Commissioner is satisfied that there is an overpayment of tax, the overpaid tax shall be deemed to have been offset against the taxpayer’s future tax liabilities. (Finance Act 2021- wef-01Jan2022*)

(5)* The Commissioner shall repay the overpaid tax within a period of two years from the date of application, failure to which the amount due shall attract an interest of 1% per month or part thereof of such unpaid amount after the period of two years.   Finance Act, 2016Effective 1 January 2017*

Offset or refund of overpaid tax(Finance Act 2022-wef-01-July-2022)

(1) Where a taxpayer has overpaid a tax under any tax law, the taxpayer may apply to the Commissioner, in the prescribed form—

(a)to offset the overpaid tax against the taxpayer's outstanding tax debts and* future tax liabilities; or (Finance Act 2023 wef 1st-July-2023 s60*) 
(b) for a refund of the overpaid tax within five years, or six months in the case of value added tax, after the date on which the tax was overpaid. Deleted by (TPAA 2024 wef 27th December, 2024 S7)

(1*) Where a taxpayer has overpaid a tax under any tax law, the taxpayer may apply to the Commissioner in the prescribed form— 

(a) to offset the overpaid tax against the taxpayer’s outstanding tax debts and future tax liabilities including instalment taxes and input value added tax; or 

(b) for a refund of the overpaid tax— 

(i) in the case of income tax, within five years from the date on which the tax was overpaid; or 

(ii) in the case of any other tax, within twelve months from the date on which the tax was overpaid. (TPAA 2024 wef 27th December, 2024 S7*)

(2) The Commissioner shall ascertain and determine an application under subsection (1) within ninety days and where the Commissioner ascertains that there was an overpayment of tax— 

• (a) in the case of an application under subsection (1)(a), apply the overpaid tax to such outstanding tax debts and* future tax liability; and (Finance Act 2023 wef 1st-July-2023 s60*) 
• (b) in the case of an application under subsection (1)(b), refund the overpaid tax within a period of two years from the date of the application six months from the date of ascertainment and, if the Commissioner fails to refund, the overpaid tax shall be applied to offset the taxpayer’s outstanding tax debt or future tax liabilities*;(Finance Act 2023 wef 1st-July-2023 s60*) 

(3) Where the Commissioner fails to ascertain and determine an application under subsection (1) within ninety days, the same shall be deemed ascertained and approved.

(4) The Commissioner may, for purposes of ascertaining the validity of an application under subsection (1), subject the application to an audit.

(4A*) Where an application under subsection (1) has been subjected to an audit under subsection (4), the Commissioner shall ascertain and determine the application within one hundred- and twenty-days failure to which, the application shall be deemed to have been ascertained and approved. (Finance Act 2023 wef 1st-July-2023 s60*) 

(5) Where the application is for a refund of tax under subsection (1)(b), the Commissioner shall apply the overpayment in the following order—

• (a) in payment of any other tax owing by the taxpayer under the specific tax law;
• (b) in payment of a tax owing by the taxpayer under any other tax law; and
• (c) any remainder shall be refunded to the taxpayer.

(6) Where the Commissioner fails to refund the overpaid tax within the period specified in subsection (2)(b), the amount due shall attract interest of one per cent for each month or part thereof during which the amount remains unpaid.

(7) Where the Commissioner notifies a taxpayer that an application under subsection (1)(a) has been ascertained and applies the overpaid tax liability to offset an outstanding tax in accordance with subsection (2)(a), interest or penalties shall not accrue on the amount applied to offsetting the outstanding tax liability from the date of the notification.

(8) Where the Commissioner has applied the overpaid tax to offset an outstanding tax liability under subsection (2)(a), any outstanding tax after such application shall accrue interest and penalties in accordance with this Act.

(9) Notwithstanding any other provision of this section, where a person overpays an instalment tax due under section 12 of the Income Tax Act, the Commissioner shall apply the overpaid tax to offset the taxpayer’s future instalment tax liability.

(10) Where, after the application of the overpaid tax under subsection (9), the Commissioner later determines that there was no overpayment of instalment tax, the amount of the tax that was used to offset the taxpayer’s future instalment tax liabilities under subsection (9) shall be treated as a tax due to the Commissioner in the subsequent tax period.

(11) The amount due under subsection (10) shall be due from the date that the Commissioner applied that amount to offset an instalment tax liability.

(12) The Commissioner shall notify the taxpayer in writing of the amount due under subsection (10) and specify in the notification—

• (a) the interest on the amount due; and 
• (b) any penalties due in respect of the amount due.

(13) A person aggrieved by a decision of the Commissioner under this section may appeal to the Tribunal within thirty days after being notified of the decision.

47A. Refund of tax paid in error.(Finance Act 2022-wef-01-July-2022)

(1) Where tax has been paid in error, the Commissioner shall, except as otherwise provided in this Act or the relevant sdtax law, refund such tax.

(2) In processing a refund under subsection (1), the provisions of section 47(1), (2), (3), (4) and (5) shall apply, with the necessary modifications.

(3) For the purposes of this section,

“tax paid in error” means any tax paid which the Commissioner is satisfied ought not to have been paid.

47B. Refund of tax paid on exempted or zerorated supply. (Finance Act 2022-wef-01-July-2022)

The Commissioner may, upon approval by the Cabinet Secretary, refund a tax paid in error in any case where the supply is exempt or zero-rated under the Act but such exemption or the zero rating was not processed within the specified period due to circumstances beyond the control of the taxpayer.

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