Select Your Location
If you ended up paying more tax than your actual tax burden in a particular fiscal year, you may be entitled to an income tax refund after completing your income tax return (ITR) for that year. But you will not get your income tax refund until the time the tax authority assesses & processes your ITR and verifies it with you via an intimation notice. This notification is given to you in accordance with the provisions of Section 143(1) under the Income-tax Act of 1961.
Based on the assessment done by the income tax department, the refund may either equal or be more or lower than what is stated in the return of income. This is the amount that the taxpayer would ideally get from the income tax department.
Table of Contents
A taxpayer can only claim an income tax refund if he or she files an income tax return. Because the procedure of claiming an income tax refund is dependent on ITR filing, the time restriction for claiming an IT refund will be the same. The latest time restriction for filing your taxes and requesting a refund for any AY is the end of the assessment year. For example, the final deadline to receive an income tax refund for AY 2021-22 is March 31, 2022, which is also the last date for late filing of ITR for FY 2020-21.
The Income Tax Department processes the refund only after processing your ITR, according to protocol. In most cases, it takes 30-45 days from the date of e-verification of your Income Tax Return for your refund to be credited.
The tax refund is handled by the State Bank of India (SBI) and it is directly credited to the bank account which is specified by the assessee in his or her ITR when it is filed with the department. As a result, it is critical to cross-check that you have entered the correct bank account number, its details, and IFSC code.
In addition, the concerned bank account must be pre-validated on the government’s new income tax e-filing system. Also, the PAN information must be properly attached to the bank account.
Furthermore, one should file his or her ITR before the deadline to ensure that the income tax refund is processed quickly.
Section 244A prescribes the provisions relating to interest on income tax refunds and it provides for a 0.5 percent rate of interest each month or part of a month on the refunded amount of tax. If the refund amount is attributable to an excess advance tax paid or TDS deduction, then such interest should be computed from the first day of April of the relevant assessment year to the date of award of refund.
Income tax refunds are not taxable in the hands of the assessee since they represent the excess of tax liability paid over the total taxable income of a taxpayer and are evaluated for tax responsibility in a given year. However, interest on income tax refunds is taxable as income from other sources.
There are two methods to track one’s income tax refund, either on the government’s new income tax e-filing system or through logging onto the NSDL portal.
On the government’s new income tax e-filing system, follow the following steps:
Through the NSDL portal, one should follow the following steps:
One should bear in mind that the assessee can see the status of the tax refund on this website 10 days after the refund has been forwarded by the Assessing Officer to the refund banker.
The status of a tax refund can be from any of the following:
Refund Credited: If your income tax refund has been successfully credited to your bank account, this message will be shown. It will also display the last four digits of the bank account, as well as reference numbers and the date of the refund. Check with your bank to see whether you have received a refund. If you haven’t received your payment, you should contact your bank to find out and determine the problem.
No demand No refund: In this case, you are not entitled to a refund and are not obligated to pay taxes. If you have requested a refund, review the comparison you got from the IT department and submit a rectified return if necessary.
Refund not paid: In this case, the refund was accepted by the IT department, however, it was not paid owing to a mistake in the bank or address information. Please update your information on the income tax site and seek a refund reissue.
Re-issue request: You can file a refund re-issue request on the new income tax site in case your tax refund is not credited to your bank account owing to rendering inaccurate bank details. This may only be done if your tax refund credit has been denied.
Select ‘Refund Reissue’ from the ‘Services’ menu to submit the request to the department. To submit a request, an individual must first pick the ITR for which an income tax refund has been denied, then select a bank account and verify it.
Refund status not determined: Your ITR is yet to be processed by the tax department. After a few days, verify the status again.
Refund Determined and is sent to the Refund Banker: The refund request was approved by the IT department, and the refund banker was notified. In this case, you must wait for your refund to be credited to your account or contact your refund banker to inquire about your refund payment status.
Determination of demand: In this case, your tax computation is such that it differs from that of the IT department, necessitating the payment of an extra tax. To determine the mismatch/error, one should use the calculation described in Section 143(1). The assessee needs to make a payment to the IT Department within the stipulated timeframe if a mistake/error occurs. Otherwise, file a rectification together with any supporting information and documentation to prove your refund claim if there was no error.
After the rectification request is processed by the IT department, your may be either issued a refund, demanded an additional tax to be paid, or you may be neither required to pay any additional tax nor eligible for a tax refund, depending upon the case.
Adjusted against outstanding demand of earlier year(s): The income tax department may adjust your current-year income tax refund in part or in full against outstanding demand from the previous assessment year. Section 245 gives the tax department complete right to do this. However, such an action can be performed only after notifying the taxpayer in writing about the deliberate action.
When a taxpayer overpays income tax to the government in comparison to its real income tax burden for a particular year, the excess amount is reimbursed by the Income Tax Department after appropriate evaluation. This reimbursed money is referred to as an “Income tax refund.”
Read our article:All about Income Tax Intimation Notice after ITR Filing
A CA together with MBA (Fin) and M Com, she relishes taking interest in insightful writing in the domain of taxation and finance. She has gained experience as a full-time author and has also served an accounting role in industry.
The Financial Action Task Force, i.e. FATF (the Force), is the global money laundering and terr...
Advance tax refers to the payment of the tax liability before the end of the relevant financia...
On 11.12.15, the Hon’ble Delhi High Court (HC) pronounced a landmark judgement in the case ti...
Money laundering can be defined as the process of illegal concealment of the origin of money ob...
Every assessee in India is obligated to file an income tax return and make the timely payment o...
In the recent past, India has seen burgeoning demand for internet and smartphones. The rapid ri...
The Securities and Exchange Board of India (SEBI), the capital markets regulator, has recommend...
The objective of the enactment of the Prevention of Money-laundering Act, 2002, i.e. PMLA (the...
Tax planning is a continuing effort and a management strategy for ensuring the minimization of...
On 18th May 2023, the Securities Exchange Board of India (SEBI) released a Consultation Paper o...
Are you human?: 4 + 8 =
Easy Payment Options Available No Spam. No Sharing. 100% Confidentiality
In the "Financial Stability and Development Council" meeting held on 20th June 2019, the highlights of the upcoming...
22 Jun, 2019
Advance ruling was conceived with a view to provide certainty to business as opposed to litigation in reference to...
05 Aug, 2021
Red Herring Top 100 Asia enlists outstanding entrepreneurs and promising companies. It selects the award winners from approximately 2000 privately financed companies each year in the Asia. Since 1996, Red Herring has kept tabs on these up-and-comers. Red Herring editors were among the first to recognize that companies such as Google, Facebook, Kakao, Alibaba, Twitter, Rakuten, Salesforce.com, Xiaomi and YouTube would change the way we live and work.
Researchers have found out that organization using new technologies in their accounting and tax have better productivity as compared to those using the traditional methods. Complying with the recent technological trends in the accounting industry, Enterslice was formed to focus on the emerging start up companies and bring innovation in their traditional Chartered Accountants & Legal profession services, disrupt traditional Chartered Accountants practice mechanism & Lawyers.
Stay updated with all the latest legal updates. Just enter your email address and subscribe for free!
Chat on Whatsapp
Hey I'm Suman. Let's Talk!