What are the Points to Take Care of for Income Tax Refund?
As per the Income Tax laws of India, you are eligible for a refund if you have paid excess tax or your employer has deducted excess Tax Deducted at Source (TDS). However, there are many doubts and misconceptions pertaining to refunds, which TaxSpanner will address through this article. With the right information at your fingertips, you can claim your refunds for the amount you are eligible for and also, without any delays.
- What is a tax refund?
In a layman’s terms, if the tax paid to the income tax department is more than what you owe, you are eligible for a tax refund.
- How does a tax refund arise?
A tax refund arises due to excess tax being deducted from your salary, which would usually happen if you have failed to declare or show proofs for certain investments on time, but later included them while filing for income tax returns. At times, tax projections made in the beginning of the financial year are very different from the actual tax saving investments made till the end of the year. In such a case, you may mostly end up paying more tax. Following are a few situations where this might happen:
- Excess of tax paid in advance on self – assessment basis than the tax payable on the basis of regular assessment.
- Tax benefits and deductions for certain investments are not declared to employer but the same is claimed while filing Income Tax return.
- Claiming eligible unclaimed exempt allowances while filing the income tax return.
- How to claim a tax refund?
From June 2015, the income tax department has made it mandatory for people to file their return online for claiming tax refund. You can claim your refund by e-filing your return. Necessary details needs to be filled from Form 16 or Form 16A or Form 26AS.
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In case you fail to claim refund for a specific reason while filing the return, you can do so later by filling Form 30.
- What is the due date available to file for a tax refund?
As per the Central Board of Direct Taxes (CBDT), the last date for filing returns and claim refunds without any penalty is 31 July, 2016 for this year. Usually, tax refunds can be claimed within two years from the end of the financial year for which refund claim is related.
- What is Form 26AS? How does my tax refund depend on it?
Form 26AS is a consolidated annual tax credit statement. It acts as a proof of tax paid directly by you or deducted/collected on your behalf. It is linked with your PAN and includes details of TDS (Tax Deducted at Source), TCS (Tax Collected at Source) and advance tax/self assessment tax/regular assessment tax deposited in the bank.26AS is generated for each financial year and is used to double check TDS with Form 16 and Form 16A issued, as well as advance tax/self assessment tax paid. You can view your 26AS on TRACES (TDS Reconciliation Analysis and Correction Enabling System) website https://www.tdscpc.gov.in/app/login.xhtml. You can also visit this page after you login on the income tax website http://www.incometaxindiaefiling.gov.in/Pages/default.aspx.
Sudhir Kaushik, co-founder of TaxSpanner.com, explains the importance of Form 26AS, “Before claiming a tax refund you have to check your tax credit statement or Form 26AS. Even if your return shows excess tax paid by you, but the same is not reflected in your 26AS statement, then you will not get the refund easily.”
- How long does it take to receive a tax refund?
A refund, usually takes 3-6 months from the date of filing your online return. It might take more time when physical filing might be opted instead of e-filing. However, due to new initiatives and increase in the efficiency of processing by the income tax department, refunds are now expected to reach your bank account earlier.
- How will I get my tax refund – through cheque or ECS?
While filing the return, the mode of refund should be chosen by you. There are two options available till A.Y. 2015-16 and only one option of ECS available from A.Y. 2016-17:
- ECS: The refund is deposited directly into your bank account via electronic transfer. But, you need to ensure that you furnish your bank account number, IFSC code, MICR code, bank name and branch name at the time of filing returns.
- Cheque: You can also opt to receive a cheque drawn on the State Bank of India, which will be sent to your communication address via speed post.
- How to check tax refund status?
You can check your refund status by entering the PAN/TAN and Assessment Year details on the following sites:
- Income Tax Refunds: – https://tin.tin.nsdl.com/oltas/refundstatuslogin.html
- TDS Refunds: – https://tin.tin.nsdl.com/oltas/refundstatusloginfortan.html
- You can also log onto https://incometaxindiaefiling.gov.in if you have e-filed your returns.
- Why I have not yet received the tax refund?
There can be several causes for the delay of the refund.
- The refund is yet to be determined by the income tax department
- You have filled incorrect data while filing the return
- You have filed the return late
- You have not e-filed the return
- Your refund calculation might have been found incorrect by the income tax department
- The income tax department needs additional information or documentation from you
- You have furnished incorrect bank account details or communication address
- If you still owe unpaid tax (tax demands), the refund amount will be adjusted towards the demand and balance will be processed.In most cases, the income tax department will intimate you online or through a postal letter along with the method of correction or grievance filing. You can make necessary rectifications and request a refund reissue.
- What should I do if I have not received the tax refund?
You may wait for your refund, log on to the income tax website, call on the toll free numbers or contact the jurisdictional assessing officer, depending on the cause of delay or rejection. Refer Question 9 above.
- Do I get any interest on a tax refund?
Yes. If there is a delay in processing of refund, you will get an interest at the rate of 0.50 per month or 6% per year from the first day of the assessment year until the refund is paid to you in case refund is due to Advance tax or TDS/TCS. Here, even a part of the month is taken as a full month for calculation purpose.However, in case there is any delay in filing refund from your end, no interest will be paid for the period of delay. For example, if you have filed return in September, you will get interest from September onwards for the delay, if any.
You are eligible for the interest only if the amount due for refund is more than 10% of the tax payable by the taxpayer.
- Is the tax refund taxable?
The refund amount is not taxable, but the interest received on the refund is taxable as per the slab rates applicable to your income bracket.
You must bear in mind that the only way to claim a refund is to file your return. The sooner you file your return, better are the chances of getting the refund and that too, faster.
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