Income Tax Refund is referred to the amount of excess tax paid which is returned to the taxpayer. The refund is the difference between the actual tax paid and the actual tax payable. 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. Income Tax refund arises in case of a mismatch between the tax amount paid and the actual payable amount. If the amount paid is higher than the actual amount payable, a refund is initiated. The Form 30 is used for the same purpose. Under the income tax and other Direct Tax laws, refunds arise in those cases where the amount of tax paid by a person (or paid on his/her behalf) is greater than the amount on which he/she is properly chargeable. This is noted under Sections 237 to 245 of the Income Tax Act, 1961. The Income Tax Department of India gives a service to check the income tax refund status online. The online refund portal makes it easy for the taxpayer to verity their tax refund status. The tax refund payment can be made directly to the taxpayer's account electronically or through a refund cheque. Proper details about the Account number, IFSC Code and address must be filled while e-filing the income tax return by the taxpayer. The service of speed post is used for sending the refund cheques.
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.
The easiest way to file for your tax refund is to declare your investments in Form 16 (life insurance premiums paid, house rent being paid, investments in equity/NSC/mutual funds, bank FDs, tuition fees, etc.) while filing your IT return and submit the necessary proofs. If you’ve failed to do so and have been paying extra taxes you think you could have avoided, you will need to fill out Form 30.
Form 30 is basically a request for your case to be looked into and the excess tax that you have paid is refunded. Your income tax refund claim needs to be submitted before the end of the financial year. Your claim needs to be accompanied by a return in the form (prescribed under section 139).
The Income Tax authorities who are present at the Centralised Processing Centre (CPC) in Bengaluru are responsible for processing the Income Tax (IT) refund. The refunds are processed once the assessee files his/her Income Tax Returns (ITR). If any tax reimbursement arises at the time of processing the ITRs, the IT refund banker receives the orders for refund of income tax which are generated and transferred by the IT authorities.
The payment of income tax refund is made in one of the following methods:
• Direct transfer of the amount to be refunded to the taxpayer’s bank account: This is the usual method which is used for the purpose of transferring the income tax refund amount to the taxpayers. The transaction might be made through NECS/RTGS. It is important on the part of the taxpayer to make sure that all the details pertaining to his/her bank account are properly furnished in the return forms at the time of filing the returns. This enables the easy and fast movement of funds directly to the account.
• Income Tax Refund via cheque: This method is an alternative option for transferring the Income Tax refunds. In the case of the bank details provided by the taxpayer at the time of filing the Income Tax Returns (ITRs) is not unclear, incomplete, or wrong, the Income Tax authorities issue a cheque addressing the account number which is furnished by the taxpayer at the time of filing his/her returns.
You can check your refund status online by using the below procedure:
• 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’.
Income tax refunds must be claimed within one year from the date on which the assessment year ends. However, in certain cases, assessing officers tend to entertain refund claims that were filed after the specified due date. Here are some points you need to keep in mind:
• Income tax refund claims will not be considered if six successive assessment years have been completed.
• The refund amount must be less than Rs.50 lakh for a single assessment year.
• Interest will not be offered on refund of late claims.
• If the delayed claims require verification, the assessing officer could reconsider the claim.
If the refund is 10% or more of the tax paid, the Income Tax department has to pay Interest on Income Tax Refund. Interest on Income Tax Refund is payable at the rate of 0.5% per month or part of the month on refund amount starting from April 1 st of the Assessment year till the date of payment of refund as per Section 244A. An online request for rectification can be raised by logging in to the account in case of any discrepancy in the interest computation. Under Section 244A of the Income Tax Act, in case the refund payment is delayed, the Income Tax Department is liable to pay interest at 6%.
There are many cases wherein you will be eligible for a refund. Some of them are:
• If the tax you’ve paid in advance on the basis of self-assessment is more than the tax payable on the basis of regular assessment.
• If your tax deducted at source (TDS) from salary, interest on securities or debentures, dividends, etc. is higher than the tax payable on the basis of regular assessment.
• If the tax charged, based on regular assessments, gets reduced because an error in the assessment process was resolved.
• The same income is taxed in a foreign country (with which the government of India has an agreement to avoid double-taxation) and in India as well.
• If you have investments which offer tax benefits and deductions that you have not declared.
• If you find, after considering the taxes you’ve paid and the deductions you are allowed, that the tax paid amount is in the negative.
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