What is an Income Tax Refund?
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.
Am I eligible for an 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 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.
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 that your case be looked into and your excess tax paid be refunded. Your income tax refund claim needs to be submitted before the end of the financial year. You 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).
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.
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.
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 this two steps to claim income tax refund.
- 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 income tax departmental website or through NSDL-TIN website by clicking on “Status of Tax Refunds”. You will then need to enter your PAN number and assessment year for refund details.
- 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 Payable on Delay in Refunds
There have been many cases reported that taxpayers do not get their refund in due time. Don’t panic, because you will receive an interest of 0.5% (on your refund) for every month or part of a month that the refund is delayed. The interest calculation commences from the 1st of April of the assessment year. However, if it is found that the reason for any duration of delay is attributable to you, you will not receive any interest for that duration.
Setting-Off Outstanding Taxes against Refunds:
The case may also arise that you have some outstanding taxes to pay. Tax authorities have the power (under Section 245) to set-off your refund amount against such outstanding taxes. However, this can only happen after an intimation in writing is sent to you, proposing that this is the course of action that will be followed.
Income Tax Refund is basically the difference between the actual amount of money you’ve paid on taxes vs. the amount of money you’re expected (liable) to pay. You can save a lot of hard-earned money by just declaring your investments and rent (if any) and other permissible deductions like mutual funds, NSC certificates, post office time deposit (POTD) certificates, stocks and equity investments, tuition fees of your children, home loan EMI , bank FDs or term deposits, etc. It is important to read up on the various tax-benefits and schemes made available to you and make full use of them to make sure you hard earned money stays in your pocket.
News About Income Tax Refund
August 31st is the deadline to complete all pending ITRs, Refunds - CBDT
Central Board of Direct Taxes, CBDT has announced that the last date for filing of all pending ITRs and tax refunds is August 31st. This is applicable to taxpayers who have pending ITRs for six assessment years between 2009-10 to 2014-15. These taxpayers are required to authenticate their income tax returns using any of the online methods like Aadhar based verification or bank account-based.
This verification must be completed before the 31st of August 2016. Alternatively, taxpayers can also send their ITR copies to the Bangalore office by speed post. CBDT is the central policy making body of the Income Tax Department and has been working towards making ITR filing as quick and hassle-free as possible.
17th May 2016
Fiscal Year 2015-2016 Record Income Tax Refunds of Rs.1.22 lakh Crore
According to the Income Tax Department, the financial year 2015-2016 made over 2.10 crore refunds totalling to Rs.1,22,425 crore rupees, compared to the previous fiscal year’s total of Rs.1,12,188 crore rupees.
Over 94% of the returns were filed online in 2015-16. The Central Processing Centre (CPC) in Bengaluru processed 4.14 crore returns without the use of human labour. The Central Board of Excise and Customs (CBEC) and the Central Board of Director Taxes (CBDT) are currently making the best of technology to ensure faster assessment, refunds, custom clearance as well as to facilitate trade. E-payment of refunds such as central excise and service tax is being done via NEFT and RTGS. Therefore, service exporters receive 80% of refund amount in a matter of five days.
9th May 2016
CNDT reduces issue Resolution Time to 15 days
Considering the rising cases of refund-related grievances, CBDT has asked the Income Tax Department to reduce the processing time from 30 days to 15 days for the current fiscal. The idea is to reduce the time for processing and to clear off as many grievances as possible since the current number of pending requests is huge.
This however, is a one time measure being employed only to lend speed to the process of grievance redressal and to clear out the huge number of pending requests with the department currently.
23rd March 2016
IT Department to Refund Tax in 15 days
Central Board of Direct Taxes has issued fresh direction to IT Department to process the refunds within 15 days instead of 30 days in order to reduce the grievances. This is just a one-time measure to clear the backlog of refunds and it is valid till 31st March, 2016. Urgent steps are to be taken to resolve the disputes worth Rs.16,000 crore of over 1.49 lakh taxpayers by March end. CPC will issue refunds without adjustments if the jurisdictional AO does not respond within the stipulated time.
15th March 2016
IT Refunds move faster due to the Upcoming Union Budget 2016-17
If a citizen and taxpayer has contested for a tax refund, and has received no response he or she will receive the refund within 30 days. This is decided in order to make refunds faster, and time bound. The Finance Minister Arun Jaitley, will unveil steps to streamline and layout any procedure issues to get refunds of Income Tax.
16th February 2016
Refund Process for Tax revolutionised by Online Certificates
The online certificates introduced for the purpose of tax refunds have revolutionised the tax refund process and have made the whole process speedier. This is what the Chief Commissioner of Income Tax department had to say when asked about the impact of online certificates.
The issue of refund is a complex issue for most taxpayers and used to involve a lot of hassle which has been cut down drastically in a single stroke with the launch of online certificates. Several such online and convenient processes have been introduced by the Income Tax Department to make the taxation process easier and friendlier for people. With the current success of these measures in the IT capital, Bengaluru, the department has decided to roll them out in all parts of the country for easier implementation of the taxation process.
24th December 2015
IT Department to expedite refund claims under Rs 50,000
In good news for taxpayers expecting a tax refund, the Central Board of Direct Taxes has instructed Income Tax officials to expedite refund claims for amounts under Rs 50,000. The government currently has pending refunds to the tune of Rs 5,400 crore, causing major problems for taxpayers. Refunds for amounts under Rs 50,000 account for around 80% of all refunds due for the last two years and the department hopes to settle these as soon as verification is completed.
15th December 2015
Foreign Travelers might be Eligible for Tax Refund after Departure from India
International travellers purchasing goods from India will be now eligible fortax refunda as per the proposed tax regime for goods and services. The goods and services reime is expected to replace several taxe levied by the Central and State Government.
However, the new regime might cause trouble for exporters, who would lose access to duty-free imported inputs and eventually make upfront payments of GST that would only be refunded, later. Payment of the new tax will be possible through debit or credit cards.
According to Prashant Deshpande, senior director at Deloitte in India, "A quick perusal of the reports indicates that the processes accommodate the peculiarities of state laws such as casual dealer, voluntary registration and compounding schemes as well as peculiarities of central laws such as input service distribution mechanism for service providers,"
13th October 2015