Filing Your Income Tax Returns in India

 

Income Tax Refund is a term that almost everyone is aware of, and if you have filed your taxes in the past then you must have surely received a Tax refund depending upon your financial submissions.

Section 237 to 245 of the Income Tax Act deals with the provisions relating to refund of tax. An income tax refund can be claimed when the taxpayer has paid more taxes than his actual tax liability. It could be in the form of advanced tax, self-assessment tax, tax deducted at source, tax collected at source, or even foreign tax credit.

Who is Eligible for Income Tax Refunds?

Any taxpayer who has paid income tax in excess more than his tax liability is eligible for tax refunds. Section 238 of the income Tax act prescribes certain provisions on claim eligibility as stated below-

1. When an individual income is added to the income of another person. For eg. a minor child’s income is combined with the income of their parents’ income, the latter can claim the excess amount.

2. If a taxpayer is not able to claim due to unforeseen circumstances like insolvency, death etc. his guardian or representative can get its refund.

3. If the amount of TDS has been deducted by the tax payer’s employer or bank exceeds the taxpayer’s tax burden as determined by regular assessment. 

4. In situations where a taxpayer's income is taxed both in India and in foreign country (With which India has an agreement to help avoid double taxation).

5. If the taxpayer has not declared an investment that provided a tax benefit to him.

How do I Claim My Income Tax Refund?

The easiest way to claim income tax refund is to file your income tax returns. It should be verified through Aadhar number OTP, and EVC generated through a bank account or physically verified by posting the signed ITR-V (acknowledgment) within 120 days from the date of filing of returns.

Process of Refund

At initial level the refunds are processed by a centralized processing system following which the returns are issued to the taxpayer. Even though the time period permitted for its verification is 120 days from the date of filing it is important to complete the verification as soon as possible. The earlier the verification stage is completed quicker your refund will be processed. For faster processing of your income tax refund, online e-verification is the way to go.

Issues in the Refund Process

After a certain period of time a record of taxpayer is usually transferred to the jurisdictional assessing official and the same would be informed to the taxpayer. After that taxpayer can ave a follow up for the refund from the jurisdictional assessing official by submitting an official letter in this regard.

Interest Rates on Income Tax Refund

• Section 244A, which deals with interest on an income tax refund provides interest on the refund at the rate of 0.5% per month. This interest is usually calculated from 1 April of the assessment year till the refund is granted.

• The interest rate for a refund for TDS or tax collected at source or advance tax would be 0.5% for every month, starting from 1 April till the date when the refund is granted. This is only applicable if the ITR is filed on or before the due date, else the interest will be calculated from the date of filing the ITR.

• Similarly, for refunds on self-assessment tax, the rate would be 0.5% for every month. But the interest period will be from the date of filing ITR till the date of granting the refund.

• There are various instances when the refund amount received is comparatively higher than the refund amount claimed in the Income Tax Return.This additional difference in amount is the interest on the income tax refund. It is compulsory for the income tax department to pay interest if the refund is 10% or more on tax paid. There will be no interest if the refund amount is less than 10% of the tax.

• At times taxpayers may not receive the refund within the stipulated time. In such occurrences, the department is liable to pay interest for the delayed refund. The assessee or the taxpayer will receive interest at the rate of 3% per annum. 

Tracking of Income Tax refund status

Following are the steps which a taxpayer needs to follow for tracking of income tax return status-

• Open the official income tax return website.

• Enter the PAN details, relevant assessment year, captcha image the click on the submit button.

• The following page will show the refund status.

• The refund payment details will also be shown in form 26AS in the “Tax credit statement”.

How much Income Tax is Refunded?

One needs to calculate his/her actual tax liability. If the taxes paid by a person is more than his tax liability then the extra taxes will be refunded by the tax department. An income tax calculator can be used to find out tax liability as well as the refund one is eligible for. Contact experts of BIAT consultant if you need any help in calculating the income tax refund you are eligible for.

What should I do if I do not get my Tax refund?

You need to contact the central processing centre of the income tax department and can raise the issue. Alternatively you can also be in touch with us at BIAT consultants for professional advice on income tax return e-filing.