When you have paid the government more in taxes than your actual tax obligation, you are entitled to get an income tax refund. This often occurs when a taxpayer’s advance tax, self-assessment tax payment, and/or TDS deduction are larger than their overall tax due for the financial year.
When submitting your income tax return, you can claim this refund (ITR). Currently, the deadline to submit ITRs for FY 2021–2022 is July 31, 2022. (AY 2022-23). If you meet the requirements
Who qualifies for a Tax Refund on Income?
You will be qualified for a refund in many circumstances. To name a few of them:
- If the amount of tax you have already paid under your own assessment is more than the amount due under normal assessment.
- If the tax due based on a regular assessment is larger than the TDS you get from wages, interest on stocks or debentures, dividends, etc.
- If you have unreported investments that provide tax advantages and deductions.
- If you discover that your tax paid amount is negative after taking into account your deductions and the taxes you’ve already paid.
- If a mistake in the assessment procedure results in a reduction in the tax assessed, as determined by periodical assessments.
- The same income is taxed both in India and in a foreign country (with whom the Indian government has an agreement to prevent double taxation).
How is a refund from Income Taxes handled?
The Income Tax (IT) refund is processed by the Income Tax officials who are based in Bengaluru’s Centralized Processing Centre (CPC). Once the assessee files his or her income tax return, the refunds are handled (ITR). The IT refund banker receives the orders for refund of income tax that are created and delivered by the IT authorities when there are any tax reimbursements during the processing of ITRs.
How is the Income Tax Refund Paid Out?
One of the following ways may be used to pay back income tax:
- Direct bank account transfer of the return amount to the taxpayer: This is the customary procedure used to send the taxpayers’ income tax return money. The deal might be completed via NECS/RTGS. When submitting returns, it is crucial on the side of the taxpayer to ensure that all information regarding to his or her bank account is accurately provided in the return forms. This makes it possible for money to be moved quickly and easily into the account.
- Cheque-based Income Tax Refund Transfer: This approach is an alternative for sending income tax refunds. The income tax authorities send a check addressed to the account number that the taxpayer submitted when completing his or her returns if the bank information provided by the taxpayer at that time was not ambiguous, incorrect, or incomplete.
Steps to Claim an Online Income Tax Refund
- Log in to the IT department’s official portal for filing returns.
- Sign up with your PAN, which will serve as your portal user ID.
- Select the pertinent assessment year and ITR form under the “Download” option.
- Open the Excel programme you downloaded and enter all the information requested on your Form 16.
- If you have paid more taxes than you should have, the difference will be computed automatically and shown in the “Refund” column of your ITR form.
- Once you have verified every detail, your computer will create and save an XML file.
- Click the “Submit Return” button and upload the XML file to the online tax site.
Interest on Income Tax Refund
An individual will also receive the interest on the income tax refund if the ITR is filed irrespective of the deadline.
The period for the calculation of interest on refund is based on mode of tax payment:
a) Where refund is of excess payment of advance tax or TDS or TCS:
(i) if return is filed on or before due date, period shall be from April 1 of relevant assessment year to the date of refund being granted OR,
(ii) where return is filed after the expiry of deadline, the period shall be date of furnishing ITR to the date of grant of refund.
b) Where refund is of excess self-assessment tax paid: The period shall be from the date of furnishing of return or payment of self-assessment tax, whichever is later, to the date on which refund is granted.
c) In any other case: Interest shall be calculated from date of payment of tax or penalty (date on and from which the amount of tax or penalty specified in the notice of demand is paid in excess of such demand) to the date on which refund is granted.
How can I find out where my Income Tax Refund is?
You can follow the progress of your refund thanks to the IT department. You will receive a message informing you if your officer in charge has not finished the reimbursement procedure.
To request an income tax refund, simply follow these two procedures.
- Receive Your Refund Via Direct Transfer: You can receive your refund of overpaid taxes by having an ECS transfer credit your bank account. Using your 10-digit account number and MICR code, you may also utilise RTGS/NECS to deposit the tax return straight into your account at the State Bank of India. By selecting “Status of Income Tax Refunds” on the NSDL-TIN website or the http://www.incometaxindia.gov.in website, you may monitor your income tax refund. For refund information, you will next need to input your PAN number and assessment year.
- Refund through Cheque: The reference number that the IT department will provide you will allow you to track this with the speed post service that has been charged with delivering it.
Refund pending due to Incorrect Details
At times it may happen that you have filed your ITR with a refund claim but you haven’t received it. It may be because of the following reasons: 1. Once the department has done the initial assessment of your verified ITR, it has found that no refund is payable to you. This will reflect in the notice under section 143(1) of the Income Tax Act that the tax department will send you after processing your return. Therefore, if the notice shows a refund due to you then it will be issued but if the notice shows nil refund then it means that your refund claim was not accepted as your calculations did not match those of the department’s.
2. Department has processed your refund, but you have not received it due to wrong bank details. If your refund is pending due to incorrect details provided by you, you can request the department to re-issue the same after giving the correct bank details.