Section 432 of the Income-tax Act, 2025 — Person Entitled to Claim Refund in Certain Special Cases

In plain language

What Section 432 is about

When you pay more tax than you actually owe, the law gives you a right to get the extra money back. That basic refund right sits in Section 431 of the Income-tax Act, 2025. But sometimes the person who is entitled to the refund is not the same person who should claim it — or the taxpayer has died, gone bankrupt, or become mentally or physically unable to act. Section 432 answers a single practical question: in these unusual situations, who is legally allowed to claim and receive the refund?

Section 432 does not create a fresh refund. It only redirects an existing refund to the correct hands so that money does not get stuck simply because of a change in circumstances. It re-enacts, almost word for word, Section 238 of the old Income-tax Act, 1961, so decades of settled practice continue to apply.

The two situations it covers

• Sub-section (1) — Clubbed income: Where the income of one person is included in the total income of another person under the Act (for example, a minor child's income clubbed with a parent, or a spouse's income clubbed under the anti-avoidance rules), then the person in whose hands the income is finally assessed is the one entitled to the refund on that income — not the original earner. In short, the refund follows the assessment, not the wallet.
• Sub-section (2) — Death, incapacity, insolvency, liquidation or other cause: Where a person is unable to claim or receive a refund due to him because of death, incapacity, insolvency, liquidation or any other cause, his legal representative, trustee, guardian or receiver may claim or receive that refund for the benefit of that person or his estate.

Who exactly can step in

• Legal representative — typically for a deceased taxpayer (an executor, administrator, or heir who inherits the estate).
• Guardian — for a minor or a person who is mentally or physically incapacitated.
• Trustee — where the person's affairs are held in trust.
• Receiver — appointed by a court, commonly in insolvency; or a liquidator in the case of a company being wound up.

Key conditions and limits

• The refund must flow to the beneficiary, not the representative personally. The statute is explicit — it is claimed "for the benefit of such person or his estate." A guardian or receiver is a custodian, not the owner of the money.
• No new eligibility is created. If no refund was actually due to the original person, Section 432 gives the representative nothing. The underlying entitlement under Section 431 must exist first.
• The normal refund machinery still applies. The claim is made through the return of income and is subject to the form and time-limit rules of Section 433. Interest on delayed refunds under Section 437 (0.5% per month) is also payable to the person who steps in.
• Only one person gets the refund on clubbed income. This prevents both the earner and the assessee from claiming the same refund twice.

How it interacts with related sections

Section 432 is part of the compact refund code running from Section 431 to 438. Section 431 grants the base right to a refund of excess tax; Section 432 decides who may claim it in special cases; Section 433 prescribes the form and limitation; and Section 437 governs interest. Section 432 also connects to the clubbing of income provisions (minor's income and transfers to spouse) and to the legal representative and liability provisions that make an estate answerable for a deceased person's tax.

Practical implications for ordinary taxpayers

• If a family member passes away with a pending refund, the heir does not lose the money — the legal representative files and receives it on behalf of the estate.
• Parents who report a minor child's clubbed income (say bank interest) rightly receive any refund on that income themselves.
• Keep documentation ready — a death certificate, legal heir / succession certificate, guardianship order, or court order appointing a receiver — because the department will verify the representative's authority before releasing the refund.