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Income Tax Refund

An income tax refund is sanctioned when a taxpayer pays more duties than their actual liability. It can be issued against different types of direct taxes, like self-assessment tax, Tax Deducted at Source, foreign tax credit, advance tax, etc.

IT refund is calculated after filing an income tax return. If a taxpayer is eligible to get a refund, he or she is informed of the same via SMS or email. It contains the total amount of refund credited to one’s account, along with a refund sequence number, in accordance with Section 143(1) of the Income Tax Act, 1961. 

The fund is credited either directly to the taxpayer’s account via RTGS or NEFT or is sent via cheque or demand draft to the registered address.

How to Get Income Tax Refund?

A refund is issued under several circumstances; for example, if a taxpayer has a fixed deposit and earns interest on the capital, financial institutions will levy a 10% TDS on the said interest. If that taxpayer belongs to the 5% tax slab then he or she can claim a refund (of 5%) on the additional deducted amount.

State income tax refund can also be claimed (in case of Tax Deducted at Source) if a taxpayer fails to submit Form 80C against investments like ELSS. These Mutual Funds allow a taxpayer to claim tax benefits of up to Rs. 1.5 Lakh in an assessment year. IT refund can also be claimed against failure to submit Form 80C against house rent allowance, medical expenses towards self or dependents, etc.

One can also claim an income tax refund in case his or her employer deducts more than the payable income tax.

Situation Claim process
If the tax deducted does not match with one’s stated tax liability  The taxpayer can file an IT return and claim the refund process. The taxpayer will have to share their bank’s name and IFSC codes, allowing the IT Department to refund the excess amount
If an individual does not have taxable income One can apply for a lesser (zero in case income is lower than Rs. 2.5 Lakh/annum) Tax Deducted at Source certificate by filling up Form 13. It can be obtained by the jurisdictional Income Tax Office, as per Section 197

In case an individual has to claim an online income tax refund on savings instruments like fixed deposits.

Situation Claim process
If an individual does not have a taxable income  He or she will have to submit Form 15G as a declaration within that assessment year to inform the authorities that they do not have a taxable income. However, that individual should not have any TDS on their interest income as well
Bank deducting income tax despite declaring Form 15G That taxpayer will have to submit their income tax return to claim a refund

If the taxpayer is above the age of 60 and has an FD account, they can earn tax exemption on the interest earned (up to Rs. 50,000) from that fixed deposit.

Situation Claim process
If the taxpayer does not have any taxable income for the entire financial year (despite claiming a tax deduction of up to Rs. 50,000 for income on interest) They will have to submit Form 15H to their financial institution to notify them about the absence of any taxable income
Financial institutions deducting income tax on interest income One can claim a refund by filing their income tax return

Income Tax Refund Procedure

A taxpayer can claim the refund within the assessment year that he or she has filed their IT returns in. In accordance with the Income Tax Act, 1961, taxpayers will have to file their return within 31st July of an assessment year to claim the refund.

Applying for an IT refund requires filling up the income tax refund form, as well as submitting necessary documents like utility forms and pre-filled ITR refund. The fulfilled forms can be downloaded from the official website.

Tracking the Status of IT Refund

There are two different methods to track the income tax refund status – via the income tax e-filing website, or on the TIN NSDL website.

– Via official e-filing website

Here is a step-by-step process to check the status of the IT refund.

  1. The taxpayer will have to log in to his or her account. 
  2. Navigate to the section ‘View Returns/Forms’ and select ‘Income Tax Returns’ from the drop-down menu. Select the assessment year that they want to check the refund status.
  3. They will be given an acknowledgment number, which will redirect them to a page showing when the income tax return was filed and verified, when it was processed, status, mode of payment, etc.

– Via the TIN NSDL website

The status of an online income tax refund can also be checked on the TIN NSDL website.

  1. Navigate to the official TIN NSDL website.
  2. Provide PAN details.
  3. Select the assessment year for the refund status.

State income tax refund is liable to accumulate interest if the total sum is more than 10% of the tax paid. According to Section 244A, interest is paid at a rate of 0.5% per month on the refund amount. It is calculated from the 1st of April of each assessment year till the date of disbursement of the refund.

Every tax-paying individual should know what is income tax refund and how to claim the same in case they face any discrepancy. It is one of the key features that allow a taxpayer to process reimbursement in case their income tax is incorrectly calculated.  

Income Tax Refund - FAQs

Q1. Will I be repaid if I have paid too much tax?

Yes, if you paid too much tax, it will be repaid to you. To receive your additional tax refund, you must first complete your income tax return, which is then processed. If you paid too much tax, the government will reimburse it to your bank account using the Electronic Clearance Service (ECS). However, you must guarantee that your bank account is linked to your PAN in order to receive your return in a timely way.

Q2. Is it necessary for me to present any documents or proof when I file my income tax returns?

No, you do not need to present any documentation or proof of investment while filing your income tax returns. However, in order to effectively file your income tax returns, you must supply the details of your Aadhaar card.

Q3. Who should I contact if I have questions about my refund?

If you have any questions about the refund of excess tax, you can call Aayakar Sampark Kendra at 1800-180-1961 or send an email to [email protected]

Q4. How long does it take to collect a refund from the IRS?

Income tax refunds for salaried individuals may be credited to their registered accounts within two weeks. However, this is only valid for the most recent income tax returns submitted. The average wait time for an income tax refund is between one and four months.

Income tax refunds or IT refunds are often credited to businesses within 3 to 6 months.

Q5. What are the various methods for obtaining a tax refund?

Obtaining an income tax refund is a very straightforward process. The payment is made in the form of a cheque or is credited immediately to your registered bank account.

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