Income Tax Refund for Individuals

Income Tax Refund for Individuals

Every year, taxpayers from all avenues of society find themselves at the same intersection where they must sift through reams of data to fill return forms, pay income tax Refund, anticipate refunds and more. While filing your taxes is definitely not the problem it once was, thanks to an opportunity to e-file online, it’s still essential to be aware of all your options. This is particularly true of the tax refund process, or more specifically, how to ensure that your genuine refunds are indeed credited to your bank account.

Most commercial organizations that disburse salary and self-assessing individuals may choose to overpay their dues instead of underpaying them so that they can avoid receiving notices and have to undergo a cumbersome process of back and forth communication and rectification. Then there are those professionals and traders who have to pay Advance taxes on the basis of mathematical projections. When there is an unexpected loss inprofits or income, then a corresponding refund from the tax authorities becomes receivable.

How Does One Claim an Income Tax Refund ?

Only those taxpayers whose returns had been filed by July 31 are eligible for refunds as per the I-T Act. When you e file your return and fill up the appropriate ITR form, a ‘Validate’ button shows up on the income tax government portal. If you click on ‘Validate’, the system automatically computes the refunds that are due to you and can display them on an XML file on your computer or smartphone. These returns will, of course, undergo, a thorough process of scrutiny for correctness by the assessing officer on your case before you can be allowed the reverse payment.

The CBDT will ordinarily communicate to you the status of any refunds should they become due via email. The authorities check for arithmetic errors and correctness of claims in respect of loss, expenditure or deduction. In case, a claim is found suspect and additional tax is due from the assessee then that information shall also be conveyed in the same message (Section 143(1)).

Checking the Status of Refund

The official income tax portal has a section for checking the status of your income tax refund on the MyAccount tab. All that is required is your PAN number and the Assessment Year for which refunds are being sought. This status will become visible 10 days after your Assessing officer has sent the refund amount to the Refund Banker, ie, the State Bank of India, CMP branch, Mumbai.

How Long Does it take from the Date of Filing Returns to Get My Refund?

According to Section 243(1) of the I-T Act, refund claims have to be settled within 3 months of the AO receiving the claim. If delayed, the Government is liable to pay simple interest at the rate of 15% of the excess amount claimed and accepted from the period specified below:

In case the refund claimed is for overpayment of Advance Tax or TDS and tax was paid before the due date, the period for consideration is from the 1st of April to the date of order granting the refund. After the due date the interest period shall start from the date of filing of the ITR.

In case the Income Tax refund claimed is for overpayment of self-assessed tax, the period of consideration is from the date of return filed or tax paid, whichever is later, to the date of order granting refund.

Note that no interest will be due if the refund amount is less than 10% of the total tax paid.

The Finance Act of 2017 has, however, enacted that delays on the part of the assessee are not to be included in the period under consideration.

What If I am given an Excess Amount?

It may happen that tax authorities grant you an excess amount in your refund. That is not some festival bonus you can keep. You are legally bound to return it! You are also liable to pay interest to the Government at the rate of 6% annually in case of delay (Section 243D).

Mistakes to Avoid

We recommend that after claiming a refund in the ITR form, you should check your refund status often. Always fill in your bank details meticulously and file your claims honestly to avoid rejections.

Should you feel that your sources of income are too complex, it is best to consult a tax expert such as AllIndiITR (a product of Corwhite Solutions Private Limited) to go through your calculations and claims. Internet e filing intermediaries provide you these services at very affordable rates today and there stands no reason for you to fall behind or leave your hard earned money unclaimed due to mistakes made before.


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