Income Tax Refund
An individual may end up paying taxes more than they are actually required to. This may be because of tax deducted at source or an incorrect income tax calculation. In such cases, you can claim an income tax refund.
Income Tax Refund arises in case of a mismatch between the tax amount paid and the actual payable amount. If the amount paid is higher than the actual amount payable, a refund is initiated. The Form 30 is used for the same purpose.
The term tax refund refers to a reimbursement made to a taxpayer for any excess amount paid in taxes to the federal or state government. While taxpayers tend to look at a refund as a bonus or a stroke of luck, it often represents what is essentially an interest-free loan that the taxpayer made to the government. It’s often possible to avoid overpaying your taxes so you can keep more money in your pocket each pay check—and avoid a refund when you file your tax return.
How to Claim Income Tax Refund
There is no separate process to claim an ITR refund. All you need to do is file your returns for claiming an income tax refund. If you are eligible for a tax refund, be it claiming a TDS refund, double-taxation refund, or under any other circumstance, all you need to ensure is that you file your taxes correctly and verify your filing.
1.Ensure that you file taxes before the due date. Usually, the 31st of July is the last date to file ITR for individuals.
2.To be eligible for getting a refund, you must file your taxes correctly. Make sure that all the details imputed in the ITR form are correct. Refer to Form 16, Form 24AS, TDS slips from bank interest, self-assessment taxes paid, etc., to make sure you give the correct information.
3.Once you are sure that you have all the right information, the next step is to verify whether you are eligible for a refund.
4.Know the amount of refund you are eligible for. This makes it easy to track the credit you are supposed to receive.
5.Once you file your ITR returns, don’t forget to verify your returns. This is just as important as filing returns. ITR filing verification can be done online or physically. Electronic verification is done via OTP generation linked to your Aadhar or an electronic verification code (EVC) sent to your registered mobile number. Alternatively, you can physically verify your ITR filing by posting a signed copy of the ITR Form V acknowledgment to the CPC within 120 days of filing your returns.
The income tax refund should be credited to your bank account within 45 days of ITR processing. If it takes longer, you should check with the CPC on why it is getting delayed.
How is Income Tax Refund Processed?
The processing of income tax refund is rather straightforward. Once you file your returns, verify the same either electronically or by posting a physical copy of the ITR-V acknowledgment, refund processing will start. The CPC will verify your taxes, check if the tax paid is higher than your tax liability, and begin processing the refund. Once the refund processing is complete, and an income tax refund is generated, it will automatically be credited to your bank account.
Eligibility for ITR Refund
You are eligible to receive an Income Tax Refund from the tax authorities if the taxes you have paid during a fiscal year are more than your actual tax liability. Some reasons why a taxpayer might have paid excess tax are:
1.Advance tax paid based on self-assessment is higher than actual tax liability
2.Tax Deducted at Source (TDS) deduction by employer is higher than the tax liability
3.Error in tax calculation resulting in higher tax payout than actual tax payable
4.Double taxation of income earned in a foreign country
However, in order to get a refund on the excess tax paid, you have to file your ITR correctly and get it verified.
Due Date to Claim Income Tax Refund
Income tax refunds must be claimed within one year from the date on which the assessment year ends. However, in certain cases, assessing officers tend to entertain refund claims that were filed after the specified due date. However if you forgot to file my Income Tax Return within the due date you can file a belated return upto December 31st.
Here are some points you need to keep in mind:
1.Income tax refund claims will not be considered if six successive assessment years have been completed.
2.The refund amount must be less than Rs.50 lakh for a single assessment year.
3.Interest will not be offered on refund of late claims.
4.If the delayed claims require verification, the assessing officer could reconsider the claim.
Who is Eligible for Income Tax Refund?
There are many cases wherein you will be eligible for a refund. Some of them are:
1.If the tax you’ve paid in advance on the basis of self-assessment is more than the tax payable on the basis of regular assessment.
2.If your TDS from salary, interest on securities or debentures, dividends, etc. is higher than the tax payable on the basis of regular assessment.
3.If the tax charged, based on regular assessments, gets reduced because an error in the assessment process was resolved.
4.The same income is taxed in a foreign country (with which the government of India has an agreement to avoid double-taxation) and in India as well.
5.If you have investments which offer tax benefits and deductions that you have not declared.
6.If you find, after considering the taxes you’ve paid and the deductions you are allowed, that the tax paid amount is in the negative.
How do I Track My Income Tax Refund?
The IT department allows you to track the status of your refund. If your refund procedure has not been completed by your officer in charge, you will receive a message notifying you of the same.
Just follow these two steps to claim income tax refund.
1.Get Refund through Direct Transfer: Excess tax paid can be refunded to you by crediting your bank account with ECS transfer. RTGS/NECS are also used to transfer the tax refund directly into your account, using your 10-digit account number and MICR code, through the State Bank of India. You can track your income tax refund through the http://www.incometaxindia.gov.in website or through NSDL-TIN website by clicking on “Status of Income Tax Refunds”. You will then need to enter your PAN number and assessment year for refund details.
2.Refund by cheque: You can track this with the speed post service that has been tasked with delivering it, using the reference number that the IT department will give you.
Interest on Delayed Income Tax Refund
Under Section 244A of the Income Tax Act, in case the refund payment is delayed, the Income Tax Department is liable to pay interest at 6%. The interest applicable to your refund amount shall be computed from the date on which the tax was paid to the date on which the refund was made.
