What is Income Tax Refund?
Income tax refund is an amount that is payable by the Income Tax authority to the tax payer when the actual taxes paid by the latter are more than his tax liability for the particular assessment year. For example a salaried person fails to declare the details of tax saving investments on time to his employer, and his organization ends up deducting extra taxes. In such cases, he is eligible to claim refund of excess tax deducted. Below are cases in which you can claim refund:
- TDS deducted on your salary, interest from bank deposits, interest on bonds etc are more than your actual tax liability for the assessment year
- Advance tax paid on self assessment is more than the tax liability as per regular assessment
- You missed submitting tax-saving investment proof which resulted in extra tax payment
- Double taxation of income
How to Claim Income Tax Refund?
If you are eligible for income tax refund, the easiest way to claim is by e-filing your income tax return. In case returns are electronically filed, you do not need to submit form 30 for claiming refund. In case you forget to claim refund, returns can be revised within the due date and claim request can be placed. E-filing facility has made the refund process quick and simple. E-filing system verifies your tax returns electronically and helps you get the work done easily. With the facility of e-filing system, refunds can be expected in few days or months.
Refund payments to tax payers are made in two ways:
- Direct Credit to Bank Account/Electronic Clearing System: Income Tax Department credits the refund amount to your bank account (details as provided by you in income tax return file) directly through ECS or NEFT.
- Cheque or Demand Draft: Income Tax Department can also make a refund by sending a cheque of demand draft to your communication address (as provided in the income tax return file) through speed post. However, most of the payments are done through direct credit to bank account after the introduction of e-filing system.
In case, you have some tax dues outstanding for the previous assessment year, the same can be adjusted or set-off against the total refund amount or a part of it. Under the provisions of Section 245 of Income Tax Act, your assessing officer can do so by responding to the intimation from Income Tax Department.
You are also entitled to receive the interest on refund amount if the refund amount is more than 10% of the total tax liability for that particular assessment year. Interest on refund is paid at the rate of 6% p a (simple interest basis) on the refund amount. Interest so received on the income tax refund is treated as income and taxable in the hands of assessee.
How to Check Income Tax Refund Status
There is an online facility offered by the Income Tax Department to check your income tax refund status. You just need to follow some simple steps to check the income tax refund status:
- Go to NSDL website (https://tin.tin.nsdl.com/oltas/refundstatuslogin.html)
- Enter your Permanent Account Number (PAN)
- Choose the financial year or the assessment year for which need to check the income tax refund status
- Submit this information to get into the page of refund status
- You can take corrective measures based on the refund status
Alternatively, you can check the income tax refund status in your income tax e-filing account. You just need to login with your PAN number and password provided to you to get into your e-filing account. Go to ‘’my account’’ tab and click on ‘’refund status’’ to know the year-wise details of your refund status.
Meaning of ‘Refund Status’ and Step Forward
- Meaning: The Income Tax Department has already processed your tax refund and refund banker has initiated the payment either by way of cheque or demand draft or through direct credit to your bank account (as per the details provided in e-filing return)
- Step Forward:
- Check your bank account to confirm the receipt of refund
- In case you have not received the refund, here’s what you can do:
– If the payment mode was direct credit/ ECS, contact your bank or State bank of India to find out the error. Take the ECS reference number reflecting in your e-filing login and check with your bank to know the amount is not wrongly credited to some other bank account. You can also send a detailed email to State Bank of India via firstname.lastname@example.org to check the status of refund credit. You can also contact them on 1800 425 9760
– If the mode of payment selected while filing the return was cheque or demand draft, take out the dispatch details from State Bank of India to track the speed post.
Status: “No Demand No Refund”
- Meaning: This means there is mismatch in calculations from you and the Income Tax Department. Your refund claim must have been denied by the Income Tax Department as they cannot find any excess payment of tax after the scrutiny. It’s important to note that all the details of TDS and other investment details are to be correctly filled and supported with documents in original filing of income tax.
- Step Forward: You can take below corrective measures
- You can revise your return and include the deductions you have missed out earlier.
- You can file a rectification to justify the same. You will have to submit all the required documents to support your calculation. You can also take help of tax experts to do so.
- No e-filing was done for the assessment year
- Meaning: You have not filed your income tax return in electronic format or your e-filing the return was not successful. It’s important to note that the Income Tax Department does not provide a online facility to check the refund status for taxes that are filed in physical format.
- Step Forward: In case your e-filing was unsuccessful, you can re-file the return. You can take help of assessing officer in case of paper filed returns.Refund Status Not Determined
- Meaning: This means the Income Tax Department is yet to process your income tax return and scrutinize your refund requirement.
- Step Forward: You will have to wait for some more days, recheck the status after some more days.
- Refund Determined and sent out to Refund Banker
- Meaning: This means the Income Tax Department has already accepted your refund claim. After the acceptance of refund claim, details of refund are sent to refund banker (State Bank of India) by the Income Tax Department.
- Step Forward: You can wait for the refund credit or contact the refund banker to know the status of refund payment processing. You can get the tracking number for payments, if already processed.
- Refund Unpaid
- Meaning: There can be two reasons:
- In case of direct credit to bank account- the bank account details submitted by you to the Income Tax Department could be wrong. Hence, it’s important to provide the correct bank account details such as bank account number, IFSC code, MICR code etc.
- In case of Cheque or Demand draft payment – the cheque or demand draft must have been returned undelivered. This could be due to incorrect address mentioned in income tax return file.
- Step Forward: Usually, reasons are displayed for the refund unpaid cases. Here is what you can do:
- Go through the details of problem as mentioned in your e-filing login.
- You can correct the details online and ask for ‘’Refund reissue request’’ through your incometaxindiaefiling account.Demand Determined
- The Income Tax Department finds that there are tax dues outstanding from your side and hence the claim for refund is denied by the Income Tax Authority.
- The Income Tax Department would have sent you notification with the details of tax dues outstanding.
- Step Forward: Here’s what you can do-
- Go through the notification sent by the Income Tax Department to find out where the actual problem lies. Verify the information with your e-filing form to figure out the mismatch or error.
- If there is actually an error in your e-filing request, then make a payment to Income Tax Department within the specified timeline.
- In case there is no error in your e-filing request, file a rectification along with all the supporting information and documents to justify your refund claim.Rectification Processed, Refund Determined and Details sent to Refund Banker
- Meaning- In case there was intimation to rectify the original return or you have filed a rectification, this status notifies that the rectified return is accepted by the Income Tax Department. And after rectification, Income Tax Authority has recalculated the refund amount and sent it to State Bank of India for processing the payment. You may also receive a revised intimation on the same.
- Step Forward: Check your bank account to ensure the refund is credited.Rectification Processed and Demand Determined
- Meaning: In case there was intimation to rectify the original return or you have filed a rectification, this status notifies that the rectified return is accepted by the Income Tax Department. However, Income Tax Department sends intimation that there are still tax dues outstanding which needs to be paid within specified timeline.
- Step Forward: Take help of assessing officers to take a corrective measure and also pay the outstanding after cross verifying all the details once again.Rectification Processed, No demand and No Refund
- Meaning: In case there was intimation to rectify the original return or you have filed a rectification, this status notifies that the rectified return is accepted by the Income Tax Department. However, the Income Tax Department concludes that there is no tax due as well as any extra tax has been paid by you. And the clarification with facts will be intimated to you through notification from the Income Tax Department.
- Step Forward: Go through the notification carefully to understand the facts.
Hence, it’s important to e-file the returns with utmost care to get the income tax refund on time. Below are some important points and steps to follow for e-filing income tax return.
Procedure of E-filing Income Tax Return
E-filing is a customer friendly system which has made the process of income tax filing quite easy. However, a small error in filling up a online form can land you in trouble by way of delaying your refund. Here are few crucial points to note and steps to follow while filing your income tax return electronically:
- Before you start, keep all the documents handy. Firstly, collect all the TDS certificates from all the deductors. Ensure digital signatures on TDS certificates are verified. Check the TDS certificates (Form 16 or Form 16A) in detail and verify. Ensure the TDS deducted by deductor is forwarded to government.
- Logon to your income tax e-filing account and download your Tax credit Statement Form 26AS. TDS deducted are updated in Tax Credit Statement 26AS as that is linked to your PAN card. Ensure each and every figure in your TDS certificate matches with your Tax Credit Statement Form 26AS.
- It’s always better to cross check so as to ensure there are no hassles later. If there are any mismatch or error that you notice, raise the issue with concerned deductor to get it rectified.
- Next step is computation of your taxable income. For this you need to add up all your incomes from all the relevant sources and include the deductions allowed, rebate etc to arrive at net taxable income. Make sure nothing is missed out. Carefully examine and recheck the entries once again to ensure everything is in place.
- Apply your slab rate to net taxable income and calculate the total tax payable by you for the assessment year. You can use online tax calculator available on IT department website (http://incometaxindiaefiling.gov.in/)
- After the calculation of total tax liability for the year, deduct all the taxes paid during the year. Tax paid in the form of advance tax, Tax deducted at source etc forms a part of tax deductions. After deducting them, you can arrive at net tax dues for the assessment year.
- Pay the tax amount outstanding for the year. Self assessment tax can be paid online via NSDL (https://onlineservices.tin.egov-nsdl.com/etaxnew/tdsnontds.jsp). The tax so paid will be reflected in your Tax Credit Statement Form 26 AS.
- Post the updating of tax payment in Tax credit statement Form 26AS, e-file your income tax return for the financial year. Due date for e-filing the income tax return is 31st July of every proceeding financial year unless the same is extended by the Income Tax Department.
Read on to know the steps of e-filing income tax return:
- Log on to Income Tax Department’s e-filing website. Register yourself to get the login ID and Password.
- User ID is your PAN number. Enter user id, password, and date of birth and captcha code to get into your e-filing account.
- After logging in, it’s important to choose the right income tax form applicable to you for the purpose of filing income tax return.
- Ensure to fill in each and every detail asked in the form correctly without any error. Once the form filling is completed, cross check all the details like contact number, communication address, bank account details, your income details and every other important details to ensure everything is alright.
- Any Income Tax form either filled directly or uploaded to website is invalid without verification. Tax payer needs to verify the income tax return filed.
- Verification of Income Tax Return can be done both electronically via digital signature as well as through signing the physical form.
- Electronic verification can even be done by using bank internet banking or by linking it to your Aadhaar card.
- If you wish to don the verification physically, you can download the acknowledgement slip or ITR-V generated after filling up online form. Hard copy of the downloaded ITR-V needs to be signed by tax payer for verification. Signed form needs to be sent to Income tax department as per the communication address mentioned on the form.