Income tax refund: Sounds quite familiar, doesn’t it? Many of us would have received a refund from the income tax department in the past. So, when and how does one get a refund? Let us explore this in detail.
Tax Refund arises when taxes paid are higher than your actual tax liability (including interest). It could be in the form of advance tax, self-assessment tax, tax deducted at source, foreign tax credit etc. Given below is an illustration showing when and how a refund arises.
||Amount (in Rs)
|Gross tax liability on (A) above – (B)
|Less: Foreign tax credit
|Net tax liability
|Add: interest on tax liability (234A, B and C)
|Aggregate tax liability
|Less: Taxes paid (C)
(Advance tax, Tax deducted at Source (TDS), Tax collected at source (TCS) and Self assessment tax)
|Tax payable (If B > C)
|Tax refund (If B < C)
1. Process to claim income tax refund
Process of income tax refund is There is no separate procedure as such in order to claim an income tax refund due to you. You can claim tax refund by simply filing the return of income in the usual manner. Ensure your return is electronically verified through aadhar number otp, EVC generated through bank account or physically verified by posting the signed ITR-V (acknowledgement) to Centralised Processing Centre (CPC) within 120 days of filing the return.
2. Early processing of return leads to early refund receipt
No doubt, a taxpayer has a time limit of 120 days from the date of return filing to verify his return. The earlier you get the verification done, the earlier CPC will process your return. Once the returns are processed by CPC at primary level for arithmetical errors etc, refund will be issued to the taxpayer. If verification of return itself is delayed, processing of return and issue of refund too will be delayed. Further, e-verification is faster compared to physical verification.
3. What to do if refund is not processed at CPC
Many a time, it is possible that your return may not have been completely processed by CPC for some reason and no refund is issued to you. Please note that taxpayer’s records, for every assessment year, are transferred to jurisdictional assessing officer by CPC after a particular time period. An intimation will be sent to the taxpayer informing the same. Once files are transferred to assessing officer, one can follow up for refund by submitting a letter in this regard to the jurisdictional assessing officer and follow up personally at regular intervals.
4. Interest on income tax refund
You might have noticed in many cases that the refund amount received by you is slightly higher than the refund amount claimed in your income tax return. This difference represents interest on income tax refund. This is payable by income tax department mandatorily, if the refund is 10% or more of tax paid.
Section 244A deals with interest on income tax refund and provides for interest at the rate of 0.5% per month or part of the month on refund amount. Such interest shall be calculated from April 1st of assessment year till the date of grant of refund if refund is due to excess advance tax paid or TDS. In case of any discrepancy in the interest computation, you may raise an online request for rectification of the same by log in to your account.
5. How to check Income tax refund status?
You can check your refund status online by using the below procedure:
If you want to know more, you can go through this detailed article on checking tax refund status online in our article ‘OLTAS payments and refunds’
- To access the refund pages.
- Enter PAN, relevant assessment year and captcha image and click on ‘submit’
- You will see the Refund Status displayed on the next screen
- You can also access the Refund payment details reflected in Form 26AS in the ‘Tax credit statement’.
6. Adjustment of refund against outstanding demand
Department may not pay you all the refunds due to you. If at all you have taxes due for any of the previous years and a refund due to you in another year, the income tax department may adjust the refund accordingly. However, the department cannot do so without giving the taxpayer an opportunity to explain why such an adjustment should not be done. So, the tax department must send you an intimation under Section 245 regarding its intention of adjustment along with instructions on possible ways for you to respond to the notice. Section 245 allows the taxpayer 30 days time limit to respond. In case of no response to the notice within the prescribed time limit, the department can go ahead with the adjustment as per notice.
In case you disagree with the tax demand raised in the notice for any reason such as incorrect computation, the omission of certain deductions or TDS etc, you may respond to it online by following the instructions provided in the notice in 30 days.
7. Beware of scam emails
Taxpayers can receive plenty of scam emails regarding income tax refund along with requests to share their bank account details over an email for processing the refund. Please be careful of such emails and note that income tax department never asks for bank details over an email. They already have these details, already provided by you in your returns. So, make sure you exercise sufficient caution.
In essence, you should always check the status of your ITR after filing and verification. Also make sure if you feed in appropriate bank account details in your return so that you receive refund without undue delay and hassles. This refund is often a pleasant surprise for taxpayers and it can be seen as a chance to make extra savings that month.
4. FAQs (Frequently Asked Questions)
What is an Income tax refund?
When your income tax paid is more than your income tax liability for a given year, the excess amount paid is refunded by the Income tax department. This refunded amount is known as “Income tax refund”
How to check the status of income tax refund ?
Log on to tin.nsdl portal > Services > Status of tax refunds> refund tracking > taxpayer refund (PAN) and click on proceed , also you can directly log in with this link https://tin.tin.nsdl.com/oltas/refundstatuslogin.html
Enter the login credentials and click submit, a window will open reflecting your refund status.
How to claim income tax refund after the due date?
In case you have missed to file your ITR before the due date. Refund of excess income tax paid can be claimed by filing a belated income tax return. Belated return can be filed before the completion of assessment year.
How to change account number in income tax refund?
To change account number for income tax refund, please log on to income tax portal> click on My account tab, > click on refund reissue request. Select the mode of refund , ECS or cheque. Enter the details of the new bank account number in the tab below.
When will we get an income tax refund?
Refunds are usually issued within 20-45 days after processing of ITR by the CPC department of income tax. Delay beyond this time limit should be enquired. You can Call the IT department on 1800 103 4455 (or) +91-80-46605200 from Monday to Friday 8:00 am to 8:00 pm for income Tax Processing Related Queries.
What is the interest from income tax refund?
Income tax department gives interest on the excess tax paid to the government i.e on income tax refund. Section 244A deals with interest on income tax refund and provides for interest at the rate of 0.5% per month or part of the month on refund amount. Such interest shall be calculated from April 1st of assessment year till the date of grant of refund if refund is due to excess advance tax paid or TDS.
Interest on income tax refund is taxable under which head?
Interest on income tax refund is taxable under ‘Income from other sources’ in the hands of the taxpayer.
How to know your income tax refund amount?
Please login to income tax portal
, with password, DOB and captcha. Go to “My account >view 26AS. The link will take you to TRACES portal, please select ok on the dialogue box. Select the relevant assessment year, and view as ‘HTML’
Why is the income tax refund delayed ?
For FY 19-20, CBDT has informed that due to upgradation of software for faster processing, refunds are delayed.
How to link a bank account to income tax refund?
Taxpayers will receive their income tax refund only if their bank account is linked with their PAN (Permanent Account Number). For this purpose, you should “pre-validate your bank account” under the income tax e-filing page
. You must log in
to the e-filing website
and update your bank account. The procedure is explained below. log on to income tax portal> click on Profile settings , > Prevalidate your bank> enter bank account details on the screen displayed. And click on ‘prevalidate’. Status of request will be sent to your email ID and mobile number. In case the validation fails, the information will be displayed under Profile settings> Prevalidate your bank account.
Do I need to file an income tax return to get the refund?
Yes, it is necessary to file an income tax return to claim the refund.
What are different Income tax refund status?
There can be various income tax refund status
Not determined- please confirm if your return is filed and duly verified.
Refund paid- the refund should be received by you, either in your bank account or by a cheque as selected by you. In case of non receipt of cheque, please track your speed post reference number on TIN website.
Assessment year not visible in refund status- Please file the return as absence of AY means return filing is pending.
No demand no refund- If as per IT department, you are not eligible for refund , then “no demand no refund “ will be reflected. An intimation u/s 143(1) will be issued showing comparison of their calculation on your registered email. Review the comparison and rectify the return if required.
Refund unpaid- This status gets reflected due to error in bank or address details. Please update the correct details on income tax portal and raise a refund reissue request
Refund determined and sent out to the refunding banker- it means a refund request is generated and sent for processing. Refunds should be received within a few days.
Demand determined- it means the IT department has rejected refund and raised a demand u/s 143(1). Intimation will be received with the calculation of tax liability as per IT department either on registered email ID or through physical notice.
Contact Jurisdictional assessing officer – This means the IT department needs some clarification. Contact the AO of your region.
What is the helpline number of the income tax department for refund related queries?
You can Call the IT department on 1800 103 4455 (or) +91-80-46605200 from Monday to Friday 8:00 am to 8:00 pm) income Tax Processing Related Queries.
Tax is deducted from my salary, but tax payable at the end of year is NIL or less than TDS amount. What should I do?
You can claim an IT refund of the entire amount of tax deducted by filing income tax return.
How to check income tax refund status for 2019-20?
Please login to efiling website,using PAN, password, DOB and captcha. Go to “My account > refund / demand status”. A screen will open displaying the status.
Interest on income tax refund is taxable under which head?
Interest on income tax refund is taxable under Income from other sources.