When a taxpayer has paid more taxes than they owe, they might be entitled to a refund. Continue reading to find out more about the ins and outs of submitting tax returns.
An income tax refund is a term that every one of us should be familiar with. If you have filed your taxes duly in the past, then you would have surely received a tax refund depending upon your financial submissions. One must be aware of the withholding tax rates in India to have a better grasp of ITR filing.
Section 237 to Section 245 of the Income Tax Act deals with the provisions relating to the refund of tax. An income tax refund can be claimed when the taxpayer has paid taxes more than the actual tax liability. It could be in the form of advance tax, self-assessment tax, tax deducted at source, tax collected at source, or even foreign tax credit.
Who Is Eligible for a Refund?
Any taxpayer who has paid tax in excess is entitled to claim the refund. Section 238 includes certain provisions on claim eligibility as stated below:
- When an individual’s income is added to the income of another person. For example, if a minor child’s income is combined with the parent’s income, the latter can claim the excess amount
- If a taxpayer is not able to claim due to unforeseen circumstances like insolvency, death, etc., his guardian or representative can get the refund
- If the amount of TDS deducted by the taxpayer’s employer or bank exceeds the taxpayer’s tax burden as determined by regular assessment
- In situations where a taxpayer’s income is taxed both in India and in a foreign country (with which India has an agreement to help avoid double taxation)
- If the taxpayer has not declared an investment that provided a tax benefit to him
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How Do I Claim My Income Tax Refund?
The simplest way to claim your tax refund is to declare your investments—such as life insurance premiums, house rent, equity/NSC/mutual fund investments, bank FDs, and tuition fees—on Form 16 when filing your income tax return and provide the required proofs.
If you missed this step and believe you’ve paid more tax than necessary, you’ll need to submit Form 30. Form 30 serves as a request to review your case and refund any excess tax paid. Ensure your refund claim and the accompanying return, as prescribed under Section 139, are submitted before the end of the financial year.
How to Check your ITR Refund Status for AY 2024-25?
Checking your ITR refund status for AY 2024-25 is a simple process that can be done online. By following the steps outlined below, you can easily track the status of your refund:
Through the Income Tax Portal:
- Step 1: Log in to your account on the Income Tax Portal
- Step 2: Navigate to ‘e-File’, select ‘Income Tax Returns’, and choose ‘View Filed Returns’
- Step 3: Click ‘View details’ to check the status of your current and past income tax refunds.
Through the NSDL Portal
- Step 1: Visit the NSDL Portal and enter your PAN details.
- Step 2: Select the relevant Assessment Year and enter the Captcha Code.
- Step 3: Click ‘Proceed’ under the ‘Taxpayer Refund (PAN)’ option to view your refund status.
Processing of a Refund
At the initial level, the returns are processed by the CPC (centralized processing center) following which the returns are issued to the taxpayer. Even though the time period permitted for verification is 120 days from the date of filing it is important to complete the verification as soon as possible without any delay. The earlier the verification process is completed, the quicker will be the processing of your refund. For faster processing of your income tax refund, online e-verification is the way to go.
Issues in the Refund Process
There are circumstances where the taxpayer’s refund is not processed by the CPC for some reason or the other. A taxpayer’s record is usually transferred to the jurisdictional assessing officer by CPC after a specific time period. This information will be made known to the taxpayer and they can follow up for the refund by submitting an official letter in this regard to the jurisdictional assessing officer.
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Interest Rates on Income Tax Refund
- Section 244A, which deals with interest on an income tax refund provides interest on the refund at the rate of 0.5% per month. This interest is usually calculated from 1 April of the assessment year till the refund is granted. One should also be aware of Section 80RRB of Income Tax Act for better tax filing.
- The interest rate for a refund for TDS or tax collected at source or advance tax would be 0.5% for every month, starting from 1 April till the date when the refund is granted. This is only applicable if the ITR is filed on or before the due date, else the interest will be calculated from the date of filing the ITR
- Similarly, for refunds on self-assessment tax, the rate would be 0.5% for every month. But the interest period will be from the date of filing ITR till the date of granting the refund
- There are various instances when the refund amount received is comparatively higher than the refund amount claimed in the income tax return. This additional difference in amount is the interest on the income tax refund. It is compulsory for the income tax department to pay interest if the refund is 10% or more on the tax paid. There will be no interest if the refund amount is less than 10% of the tax
- At times taxpayers may not receive the refund within the stipulated time. In such occurrences, the department is liable to pay interest for the delayed refund. The assessee or the taxpayer will receive interest at the rate of 3% per annum.
Tracking Income Tax Refund Status
Follow the steps below to check the refund status:
- Click on the official income tax website link
- Enter the PAN details, relevant assessment year, captcha image, and then click on the ‘submit’ button
- The following page will show the refund status
- The refund payment details will also be shown in Form 26AS in the ‘tax credit statement’.
Adjustment of Refund
In some cases, the income tax department may not pay all of your refunds and may alter the amount in the following year. In addition, in circumstances where it is required under Section 245, the tax department is required to provide a notification along with guidance for a proper response from the taxpayer. A 30-day period is given to the taxpayer to respond and if no response is received then the department can make the adjustment as mentioned. If for any reason you disagree with the tax refund amount mentioned in the notice or find any omission of specific deductions or TDS, and OLTAS TDS challan status, you can send a reply within the mentioned time period of 30 days.
Avoid Scam Mails
Taxpayers must be careful and avoid getting scammed by unofficial emails. There are many instances of taxpayers receiving scam emails that ask for your bank details to process the refund. Do not fall into this trap and share any kind of information with them. The income tax department already has all your details and will not email you asking for any kind of personal information.
How Much Income Tax Is Refundable?
One needs to calculate his/her actual tax liability. If the taxes paid by a person is more than his tax liability then the extra taxes will be refunded by the tax department. An income tax calculator can be used to find out tax liability as well as the refund one is eligible for. Contact Vakilsearch experts if you need any help in calculating the income tax refund you are eligible for.
How are Refunds Processed?
Refunds are only made in these two ways to maintain transparency
- RTGS/NEFT: Here the tax department will credit the refund directly to your account. The taxpayer needs to provide the following details to the authorized bank account. They are the 10-digit bank account number, the MICR code of the bank and the communication address
- Cheques: Alternatively, a cheque for the refund account may be sent to the applicant’s home address. Here again, it is essential to provide the right address. A mistake in entering the correct address will result in returning the cheque.
When filing taxes online, individuals can choose the payment method that is most convenient for them. However, you should be warned that an error in the communication address, bank account, or refund calculation can cause delays or even cancellation.
Taxpayers can check the status of their refund 10 days after the assessing officer sends it to the refund banker by entering their PAN and assessment year on the official portal.
What Should I Do If I Don’t Get My Tax Refund?
You need to contact the central processing center of the Income Tax Department on 1800 4250 0025 or 080-2650 0025 and raise the issue. Alternatively, you can also get in touch with Vakilsearch experts for professional advice on income tax return e-filing: https://incometaxindia.gov.in/Pages/tax-services/file-income-tax-return.aspx
Conclusion
Filing of income tax returns in India is a crucial responsibility for individuals and businesses alike. It ensures compliance with tax laws, helps avoid penalties, and contributes to the nation’s economic stability. By adhering to the guidelines and deadlines set by the Income Tax Department, taxpayers can benefit from various deductions and exemptions, ultimately promoting a transparent and accountable financial environment. Engaging with professional services from Vakilsearch can further simplify the process, providing expert assistance and ensuring accurate and timely filings.
FAQs
How to Check My Income Tax Refund Status?
To check your income tax refund status, visit the official Income Tax Department’s e-filing website and log in to your account. Navigate to the 'Refund/Demand Status' section, where you can view the current status of your refund by entering your PAN and assessment year.
What is an Income Tax Refund?
An income tax refund occurs when you have paid more tax than your actual liability for a financial year. The excess amount is refunded by the tax authorities after processing your tax return, ensuring that you are reimbursed for any overpayment.
When Will I Get My Income Tax Refund?
The timing of your income tax refund depends on the processing speed of your tax return and any verification required. Generally, refunds are issued within a few weeks to a few months after the return is filed, subject to the completion of necessary checks.
Will My Income Tax Refund Be Subject to Tax?
No, the income tax refund itself is not subject to tax. It simply represents a return of excess tax paid. However, any interest earned on the refund amount may be taxable under the income tax laws.
Can an Income Tax Refund Be Transferred to Another Account?
No, an income tax refund cannot be transferred to another account. It is credited directly to the bank account specified in your income tax return. Ensure your bank account details are accurate to receive the refund seamlessly.
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