Income Tax Refund

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, tax 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.

Who is eligible for Income Tax Refund?

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 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.

What is the Income Tax amount that I will get back?

In order to find the amount of income tax that you will get back as the refund, you must calculate the tax liability that is associated with you. If the amount that you have paid as taxes is more than the tax liability, then you will get the extra amount as a refund.

How can I get Income Tax refund in India?

When you file the return of your income, you can avail tax refund. In general, the date for filing income tax returns is July 31 of every year unless extended.

Income Tax refund
Income Tax refund

How can I claim my Income Tax refund?

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 Form 30 format is as follows: (Sample)

I, (your name), of (address), do hereby state that my total income computed in accordance with the provisions of the Income Tax Act, 1961, during the year ending on (year) being the previous year for the assessment year commencing on the 1st of April (year), amounted to Rs. (amount); that the total income tax chargeable in respect of such total income is Rs. (amount) and that the total amount of Income Tax paid or treated as paid under:

Section 199, is Rs. (amount).

I, therefore, request for a refund of Rs. (amount).

(Signature)

I hereby declare that I was resident/resident but not ordinarily resident/non-resident during the previous year relevant to the assessment year to which this claim relates and that what is stated in this application is correct.

Dated: (date)

(Signature)

It is important to note that:
  • This claim should contain a document of proof of return of income in a prescribed form, unless you’ve already made such a claim to the Assessing Officer.
  • Non-residents whose income is subject to TDS should make the claim for refund to the “Assessing Officer, Non-resident Refund Circle, Bombay”.

If you have been charged tax under the provisions of Section 192 – 194, Section 194A and Section 195 on your income (for dividends, etc.), the claim should be accompanied by the necessary certificates recommended under Section 203.

Due Date to Claim Income Tax Refund

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.

How is Income Tax refund processed?

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.

How is the payment of income tax refund made?

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.

How do I track my Income Tax Refund?

The IT department allows you to track the status of your refund. If your refund procedure has not been completed by your officer in charge, you will receive a message notifying you of the same.

Just follow these two steps to claim income tax refund.

  1. Get Refund through Direct Transfer: Excess tax paid can be refunded to you by crediting your bank account with ECS transfer. RTGS/NECS are also used to transfer the tax refund directly into your account, using your 10-digit account number and MICR code, through the State Bank of India. You can track your income tax refund through the http://www.incometaxindia.gov.in website or through NSDL-TIN website by clicking on “Status of Income Tax Refunds”. You will then need to enter your PAN number and assessment year for refund details.
  2. Refund by cheque: You can track this with the speed post service that has been tasked with delivering it, using the reference number that the IT department will give you.

Interest on Delayed Income Tax Refund

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%. The interest applicable to your refund amount shall be computed from the date on which the tax was paid to the date on which the refund was made. For example, if you claim a refund of Rs.10,000 for AY 2017-18 and you received the refund in March 2018, the interest applicable to your refund will be computed from April 2017 to March 2018.

FAQs on Income Tax Refund

  1. If I have paid excessive tax, will it be refunded to me?
  2. Yes, if you have paid excessive tax then it be refunded to you. In order to get your additional tax refunded you will have to first file your income tax, following which your return is processed. If there is any excessive tax paid by you, the government will refund it back to your bank account via Electronic Clearance Service (ECS). However, you must ensure that your bank account is linked with your PAN so that it becomes easier for you to get your refund in a hassle-free manner.

  3. What is Form 26AS? In what forms can I pay my tax
  4. Form 26AS is a credit statement which basically contains all the information regarding the details of the tax deducted on your income. You can pay your tax in the following forms given below:

    • Tax Deducted at Source (TDS).
    • Tax Collected at Source (TCS).
    • Advance tax or self-assessment tax or payment of tax on regular assessment.
  5. Do I have to submit any documents or proofs while filing my income tax returns?
  6. No, you are not required to provide any documents or investment proofs while filing your income tax returns. However, you will have to provide the details of your Aadhaar in order to successfully file your income tax returns.

  7. How do I rectify the mistakes in the name, account number on the refund cheque received by me?
  8. In case of any discrepancy regarding your name or account number, send back the cheque to CMP Operations Centre, State Bank of India, Survey No.21 Opposite : Hyderabad Central University, Main Gate, Gachibowli, Hyderabad –500019 requesting for the cancellation of the cheque. In a separate letter mention the mistake and what should be the correct information instead. You can also modify your name and account number by visiting the official website of Income Tax Department of India and log in to the portal to modify your name and account number. Once that is done, the information will be initiated and a new refund cheque will be sent to you.

  9. Whom should I contact for refund related queries?
  10. In case of any queries related to the refund of excessive tax, you can contact Aayakar Sampark Kendra Toll Free No. 1800-180-1961 or email at refunds refunds@incometaxindia.gov.in. For queries related to refund or any modification in refund record with respect to return processed at CPC Bangalore, you may call the toll-free number 1800-425-2229 or 080-43456700. For any payment related query, you should contact SBI Contact Centre Toll Free No. 1800-425-9760.

News About Income Tax Refund

  • CBDT issues a refund of more than Rs.1.18 lakh crore to 33.54 lakh taxpayers since April

    The Central Board of Direct Taxes (CBDT) has released an amount of more than Rs.1.18 lakh crore toward the refunds made to more than 33.54 lakh taxpayers in the country. This amount has been issued between 1 April 2020 and 29th September 2020.

    The official statement issued by the IT Department also mentioned that IT refunds of Rs.32,230 crore have been issued in more than 31.75 lakh cases and corporate tax refunds which amounts to more than Rs.86,094 crore towards cases numbering to more than 1.78 lakh.

    01 October 2020

  • Officers of Income Tax Department asked to process returns up to AY 2017-2018 by 31st October

    The Income Tax department has asked its officers to process the returns which were filed up to the assessment year 2017-2018 along with refund claims by October 31, 2020.

    The Central Board of Direct Taxes, in an order, had extended the time given to the tax officers to process the returns which were not picked for scrutiny by December 31, 2019.

    The CBDT has stated that in order to mitigate the difficulties faced by the taxpayers on this issue, all the valid returns filed up to the assessment year of 2017-2018 with refund claims which were not processed have become time-barred. This will now be processed with the prior administration approval of the CCIT and can be sent to the assessee by October 31, 2020.

    To clear the pending income tax refunds of taxpayers till FY 2016-2017, the CBDT had issued an order in 2019 which allowed taxpayers to file the claim for their pending refunds till and the issuance of these funds by tax authorities by 31st December 2019.

    14 July 2020

  • IT department refunds Rs.62,361 crore between April and June 2020

    The Central Board of Direct Taxes had said that it issued tax refunds of Rs.62,361 crore to over two million tax payers ever since the refund drive had begun on 8 April for improving the liquidity of businesses and individuals.

    The CBDT had also said that a refund of Rs.23,453.6 crore has now been issued in 1.9 million personal income tax instances. The corporate tax refund of Rs.38,908.4 crore has also been issued in 1,36,744 cases ever since the drive.

    An official statement had said that unlike what would happen a few years ago, in the refund cases, no taxpayer would have to approach the department for requesting for release of the refund.

    03 July 2020

  • Rs.26,242 crore worth of refunds issued by the Income Tax Department since April 2020

    The Income Tax Department announced that Rs.26,242 crore worth of refunds has been provided since April to 16.84 lakh taxpayers. The tax department has been making efforts to process the refunds quickly so that firms and individuals have money to deal with the coronavirus crisis. According to the Central Board of Direct Taxes (CBDT), more than 16.84 lakh taxpayers have received their refunds between 1 April 2020 and 21 May 2020. As per a statement given by the CBDT, Rs.11,610 crore of corporate tax refund has been provided to 1,02,392 taxpayers and Rs.14,632 crore of income tax refund has been given to 15,81,906 taxpayers. Since the announcement of the Atamanirbhar Bharat Abhiyan, the refund process has been expedited even faster. In the previous week, a sum of Rs.2,050.61 crore has been released to 37,531 income tax assesses and Rs.867.62 crore has been provided to 2,878 corporate tax assesses.

    22 May 2020

  • Faster income tax refunds in India

    Income tax refunds in the financial year 2019-2020 were done faster than those in the previous year. Whereas earlier tax refunds were sent using traditional paper cheques, now it is being refunded directly to bank accounts using the electronic clearing services. This has been the case since March 2019 which has resulted in faster and easier clearing of tax refunds. In the current financial year, 65% of tax refunds were cleared within 30 days of the income tax returns being verified. In the year 2018-2019, the percentage of tax refunds that were released within 30 days of verification was only 50%. In FY2019-20, the average time for release of tax refunds from the date of verification by the taxpayer was 59 days. For the same financial year, there are 33,175 cases which have pending refunds, which is 0.0001% of the total cases of refunds for the assessment year. This means that for AY2019-20, refunds were processed for 2.21 crore cases out of the 2.3 crore income tax returns that were filed, which comes to a percentage of 92% of tax refunds. The reasons behind delays are defective returns filed by the taxpayer, cases that are under scrutiny, and incorrect bank account details provided by the taxpayer.

    09 April 2020

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