Income Tax Taxation

ITR Refund: Know about the Easiest way to Calculate and Claim it


Whenever the gross annual income exceeds the threshold of basic exemption limit of Rs 2.5 lakh, then that earning individual has to file an ITR (Income Tax Return). However, during the income tax e-payment, claiming of the ITR refund is usually forgotten. For those taxpayers, experts’ opinion is united – Income Tax Return (ITR) for claiming an income tax refund can easily be filed if the income does not cross the exemption limit due to Tax Deducted at Source or the advance tax payment. As per the tax and investment experts, an earning person is also eligible to file ITR for claiming the income tax refund if in case his or her actual tax liability is lesser than the aggregate of the Tax Deducted at Source and the taxes paid like advance tax or self-assessment tax.

Generally, one is eligible to claim an income tax refund for one whole year, but in the cases older than that, an application is required to be submitted to the income tax commissioner, and after receiving due approval, a refund can easily be claimed. This is possible for the last six years subject to some prescribed terms and conditions.

Further. the concept of refund arises when the taxes paid are higher in amount than you are the actual tax liability, including interest. It could be in the form of self-assessment tax, advance tax, foreign tax credit, tax deducted at source, etc. Given below is an example showing when and how a refund arises.

Particulars Amount (in Rs)
Income (A) XXXXX
Gross tax liability on (A) above – (B) XXXXX
Less- Foreign tax credit XXXXX
Net tax liability XXXXX
Add – interest on tax liability (234A, B and C) XXXXX
Aggregate tax liability XXXXX
Less – Taxes paid (C) (Advance tax, TDS (Tax deducted at Source), TCS (Tax collected at source) and Self-assessment tax) XXXXX
Tax payable (If B > C) XXXXX
Tax refund (If B < C) XXXXX

Process to claim Income Tax Refund

There is no as such separate procedure prescribed in order to claim an income tax refund due to an individual. One can claim tax refund only by simply filing the return of income in the normal manner. Ensure that return is electronically verified by way of anAadhar number OTP, EVC generated by the bank account or physically verified by posting the signed ITR-V (acknowledgement) to the Centralised Processing Centre (CPC) within the period of 120 days of filing the return.

READ  Link your PAN to your bank account to avail Income Tax Refund

Early processing of the return leads to early refund receipt

No doubt, a taxpayer has a time limit of one hundred and twenty days from the date of return filing in order to verify his return. The earlier the taxpayer get the verification done; the earlier CPC (Centralised Processing Centre) will be able to process the concerned return. Further, once the CPC duly processes the returns at the primary level for the arithmetical errors, etc., the refund will automatically be issued to the taxpayer. If in case the verification of return itself is delayed, then the processing of the said return and issue of refund too will be delayed. Furthermore, e-verification is much more a faster way as compared to physical verification.

What to do if the refund is not processed at Centralised Processing Centre

Many a time, there is a possibility that the CPC may not have completely processed the taxpayer’s return for some reason, and no refund is issued to the concerned taxpayer. Please note that for every assessment year taxpayer’s records, are transferred to the jurisdictional assessing officer by the CPC after the expiry of the particular time period. Further, an intimation will be sent to the concerned taxpayer informing the same. Furthermore, once the files are duly transferred to the assessing officer having jurisdiction, one can follow up for the refund just by submitting a letter in this concern to the jurisdictional assessing officer and also follow up personally at regular intervals.

Interest on the Income Tax Refund

There are chances that might have been noticed in many cases, that the refund amount received by the concerned taxpayer is slightly higher than the actual refund amount claimed in the income tax return (ITR). Further, this difference actually represents the interest on the income tax refund. Furthermore, this concerned amount is compulsorily payable by the income tax department, if the refund is 10 per cent or more of tax paid.

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Further, section 244A deals with the interest on the income tax refund and also provides for the interest at the rate of 0.5 per cent per month or the part of the month on the refund amount.

Furthermore, such interest shall be calculated from 1stApril of the assessment year till the date of grant of the refund if the said refund is due to excess advance tax paid or Tax Deducted at Source (TDS). In case there is any discrepancy in the interest computation, the concerned taxpayer may raise an online request for the rectification of the same by just log in to his or her account.

How to check refund status?

The concerned taxpayer can check his or her refund status online by following the proceduregiven below –

  • In order to access the refund pages
  • Enter PAN (Permanent Account Number), relevant assessment year and the captcha image provided and then click on ‘submit’
  • Then the concerned will see the Refund Status showed on the next screen
  • The concerned taxpayer can also access the Refund payment details and particulars reflected in the Form 26AS in the ‘Tax credit statement’.

Adjustment of the refund against outstanding demand

The Income Tax Department may not pay the taxpayer all the refunds due to him or her. If at all he or she has taxes due for any of the previous years and a refund due to him or her in another year, the income tax department may adjust the said refund accordingly. However, the Income Tax Department cannot do so without providing the taxpayer with an opportunity of being heard to explain why such an adjustment must not be made. So, the IT department must send him or her an intimation under Section 245 concerning its intention of adjustment together with the instructions on the possible ways for him or her to respond to the said notice. Section 245 permits the taxpayer 30 days’ time limit to respond. If in case no response is given to the notice within the said prescribed time limit, the IT department can go ahead with the process of adjustment as per the notice.

READ  Why should Form 26AS be checked before Filing Income Tax Return?

In case the person concerned disagrees with the tax demand raised up in the notice for any reason such as the incorrect computation, the omission of certain deductions or the TDS etc., he or she may respond to it online by following the guidelines and instructions provided in the notice in the time period of 30 days.

Also, Read : How to Claim Income Tax Refund Online?.

Watch out of scam emails

Taxpayers can receive ample of scam emails concerning the income tax refund together with the requests to share their bank account details and passwords over an email for the processing of Income TaxRefund. Please be careful and vigilant of such emails and also note that income tax department never asks for any kind of bank details over an email, as they already have these details with them in thereturns provided by the taxpayer in his or her returns. So, make sure that the taxpayer must exercise sufficient caution.

In crux, one must always check the status of his or her IncomeTax Return after filing and verification. Further, make sure that the correct and appropriate bank account details and particulars are feed in the return so that he or she can easily receive a refund without undue delay and hassles. Lastly, this refund is often considered as a pleasant surprise for the taxpayers, and it can also be seen as a chance to make extra savings for that month.


Whenever the individual’s gross annual income exceeds the threshold of Rs 2.5 lakh, which is the basic exemption provided, then that concerned individual is required to file his or her ITR. But, at times the amount of tax paid is higher than the actual tax liability, then the concept Income Tax Refund including interest comes into the picture. It is significant to note that there is no set prescribed procedure in which one can become eligible to claim his refund. As it requires the simple filing just as we file our Income Tax Return (ITR). Moreover, there are occasions when the amount received as a refund is higher than the actual refund claimed; it means the difference is the interest applicable on the Income Tax Refund. Lastly, there is not set prescribed procedure for claiming the refund, but there is a set way for checking its status.

More on Tax : What is Income Tax Refund?.

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