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Understanding Income Tax Refunds: A Complete Guide and How to Verify Your ITR Refund Status

Updated: Dec 17, 2023


Income Tax Refund: Limits, How To Check and More - A Complete Guide
Income Tax Refund: Limits, How To Check and More - A Complete Guide

Have you ever found yourself in a situation where you've paid more taxes than you owe? If so, the good news is that you have the right to claim it back as an income tax refund. In this blog, we will lucidly put the intricacies of income tax refunds, shedding light on the process, its workings, and the necessary steps to reclaim your rightful refund.


 

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By understanding the step-by-step process and proactively filing your returns, you can optimize your chances of receiving a timely refund.


When it comes to tax payments, whether it be through Advance Tax, TDS (Tax Deducted at Source), TCS (Tax Collected at Source), or Self-Assessment Tax, there are instances where you may end up paying more than your actual tax liability.


seIn such cases, the excess amount can be claimed as a refund. However, it's important to note that the income tax department carefully scrutinizes refund claims, verifying the accuracy of the taxes paid and ensuring the validity of the refund request before proceeding with the refund process.


Calculating your income tax refund is a relatively straightforward process. It involves subtracting your total tax liability from your current year's income from the amount of taxes you have already paid.


This encompasses various forms of tax payments, such as Advance Tax, TDS, TCS, and Self-Assessment Tax. The resulting figure represents the refund you are entitled to receive. Once your refund claim is validated by the income tax department, the refund amount will be processed and promptly returned to you.


To initiate the process of claiming your income tax refund or TDS refund, it is vital to file your Income Tax Return accurately. Online filing of your ITR is not just a suggestion but a mandatory requirement to ensure a seamless refund experience. By following this online filing process, you pave the way for a swift and trouble-free refund claim.


Time is of the essence when it comes to filing your income tax returns and claiming your refund. The sooner you file your returns, the quicker you can anticipate receiving your refund, if eligible. As time progresses, the income tax department faces an increasing number of returns to process, potentially leading to delays in refund processing.


While timing plays a vital role, it's important to note that other factors can also contribute to unforeseen delays in receiving your refund. Stay tuned as we delve into common reasons for refund delays and provide valuable insights on the necessary actions you can take to expedite the refund process.


What is Income Tax Refund?


An income tax refund is a reimbursement of excess taxes paid to the government. If you have paid more taxes than your actual liability, you can claim a refund, which is calculated as the difference between the taxes paid (Advance Tax, TDS, TCS, Self-Assessment Tax) and your total tax liability for the year.


Following are the potential reasons behind the delay in getting your income tax refund:


1) In the event of your refund request being rejected, it is important to take appropriate actions to address the situation. Firstly, carefully review all your documents and recalibrate the tax liability and refund amount claimed. Upon discovering that the figures you ended up filing in the returns form are accurate, you should proceed to file a rectification return under Section 139(4) to support your claim for the refund.


On the other hand, if it gets determined that the initial income tax return (ITR) filed was incorrect, it is essential to promptly settle the outstanding tax amount demanded by the department within the specified time frame mentioned in the notice received. By proactively addressing the matter and following the prescribed procedures, you can effectively navigate this situation and work towards a resolution that meets the requirements outlined by the Income Tax Department.


2) It is not uncommon to overlook eligible deductions when filing an income tax return. This oversight can result in missed opportunities to reduce taxable income and potentially receive a higher tax refund. If you realize that you have forgotten to include a deduction you are eligible for and the Income Tax Department has not yet processed your returns, you can proactively revise your income tax return.


By making the necessary adjustments and including the missed deduction, you can ensure that your tax return accurately reflects your eligible deductions, maximizing your tax benefits within the legal framework. Acting promptly to rectify any omissions and ensuring the completeness and accuracy of your income tax return is crucial.


3) If you have recently made changes to your bank account details after filing your income tax returns, it is essential to ensure that your refund can still be credited to the correct account. In case you encounter any issues where the refund could not be credited to your bank account, there are steps you can take to resolve the situation.


Firstly, you should raise a grievance on the income tax portal to report the problem. The income tax department may guide you to raise a refund reissue request or provide the latest bank details along with other necessary information by emailing efilingwebmanager@incometax.gov.in. The required information to attach includes a scanned copy of your PAN, your contact details (including name, date of birth/date of incorporation, and contact number), a scanned copy of any government identity document (such as Passport/Voter Card/Driving License/Aadhaar card), a screenshot of the error message, and the helpdesk ticket number (grievance acknowledgment number).


By following these steps and providing the requested information, you can address the issue and ensure that your refund is processed correctly and credited to your updated bank account.


If your refund request is currently under process and experiencing a delay, it may be due to the IT department taking additional time to process your request thoroughly. To expedite the processing of your refund, there are several actions you can take.


Firstly, ensure that you have successfully e-verified your return and sent the ITR-V within the specified time limit, which is 120 days from the date of e-filing.


It is worth noting that for returns filed on or after 1st August 2022, the e-verification time limit has been reduced to 30 days from the date of e-filing. In case you haven't completed the e-verification process, you will need to revise your returns and submit the new acknowledgment to the Centralized Processing Centre (CPC) in Bengaluru.


Moreover, it is crucial to verify whether your bank account is prevalidated in the e-filing portal and confirm the validity of the IFSC code. If there has been any change in the IFSC code, such as due to a bank merger, ensure that you update the code and prevalidate your bank details accordingly.


By following these necessary steps, you can address any potential issues and help facilitate smoother and prompt processing of your refund request.


Reason: Filing returns on a physical form and not online.

Processing physical filing forms can be a time-consuming process as the IT department diligently reconciles the paperwork. It is crucial to exercise patience while waiting for the department to complete the necessary procedures. Additionally, it's worth noting that certain circumstances may warrant interest on income tax refunds, such as disparities between deducted tax amounts and actual tax liabilities. Familiarize yourself with the relevant guidelines and official resources to stay informed about these provisions.


If your income tax refund amount exceeds Rs. 50,000, there may be a requirement to pay interest on the refund based on your tax liability. It is crucial to familiarize yourself with the guidelines and regulations pertaining to income tax refunds above 50,000 to ensure adherence and prevent any unforeseen financial obligations.


How to check income tax refund status - Step by Step Guide


1) Access the official income tax e-filing portal and log in to your account using the provided login credentials.


2) Proceed to the 'e-File' section and select 'Income Tax Returns', then click on 'View Filed Returns'.


3) Step 3: Choose the relevant assessment year for which you wish to inquire about the refund and review the status of your filed return.


4) In a new window, the refund status will be displayed along with comprehensive details. If your income tax return has been processed but the refund has not been issued yet, the status will indicate 'Processed with a refund due'.


For most scenarios, it takes around 20 to 45 days after the processing of your return for the refund amount to get disbursed.


Alternatively, you can also visit the tin-nsdl website to check the status of your income tax refund. Simply enter your PAN number, and the website will provide you with the current refund status and relevant information.


The taxpayer is entitled to receive simple interest at a rate of six (yearly) percent per annum from the Central Government on the refunded amount. This interest is calculated from the day following the completion of the three-month or six-month period mentioned earlier, depending on the case, until the date when the refund gets officially granted.


The purpose of this interest on the income tax refund is to provide the taxpayer with fair compensation for any delay in receiving the refund amount.


How to Get a Refund of Excess Income Tax Paid?


To receive your income tax refund, you must file your Income Tax Return (ITR) and provide accurate information about your income, deductions, and tax payments. It's important to file your ITR online to claim your refund.


I Missed my ITR Filing by the Due Date. Can I Still Claim my Refund Now?


If you missed the deadline for filing your ITR (non-audit cases), you can still file a Belated Return until December 31, 2022, and claim your tax refund.


How Long Will it Take to Get the Refund?


The time required to receive your income tax refund varies depending on the internal processes of the Income Tax Department. On average, it takes around 90 days, but a new refund processing system implemented in February 2021 aims to expedite the process, with an expected turnaround of just a few days.


How Will I Receive the Refund?


The Income Tax Department disburses refunds through electronic transfers (direct credit) or by issuing a refund cheque. To ensure a smooth refund process, make sure to provide accurate bank account details when filing your return. Refund cheques are dispatched via speed post to the address specified in your ITR.


How is the Interest on Income Tax Refund Calculated?


When your refund amount exceeds 10% of the total tax payable for the year, you may be eligible for simple interest on the refund. The interest is calculated at a rate of 0.5% per month, starting from the beginning of the next financial year until the refund date.


Is the Income Tax Refund Taxable?


The refund amount itself is not taxable. However, any interest received on the tax refund is subject to taxation at your applicable income tax slab rate.


Is There an Income Tax Refund Helpline?


For any inquiries regarding income tax refunds, you can contact the 'Aaykar Sampark Kendra' at 1800-180-1961 or send an email to refunds@incometax.gov.in. If you need to address refund-related queries or modifications in the refund record processed at CPC Bangalore, you can reach out at 1800-425-2229 or 080-43456700. For payment-related queries, contact the SBI Contact Centre at 1800-425-9760.


How to Check ITR Refund Status through TIN NSDL Website?


Step 1: Enter the PAN Details

Step 2: The Assessment Year you want to find out, Select that year.

Step 3: Enter the Captcha 

Step 4: Click Proceed


I am Eligible For a Refund as Per my ITR But Haven't Received it Yet.


If you are eligible for an income tax refund as per your filed Income Tax Return (ITR) but have not received it yet, there are several factors to consider. The processing of refunds by the tax department begins only after the tax filer e-verifies their return. Typically, it takes around 25 to 60 days for the refund to be credited to your account.

Steps to Take:

  1. Check Your ITR Status: If you haven't received your refund within the expected timeframe, it's essential to review your ITR status. Look for any discrepancies or issues that might be delaying the process.

  2. Check Your Email: Occasionally, the Income Tax Department sends notifications regarding the status of your TDS refund. Be sure to check your email for any relevant messages from the IT department.

  3. Bank Account Pre-validation: Ensure you have pre-validated your account on the Income Tax Portal. This is a crucial step to facilitate the smooth and timely refund disbursement.


If your ITR has been verified and you have not received your TDS refund, several reasons might explain the delay:


  • Ongoing Processing: Your ITR may still be under processing by the Income Tax Department.

  • Communication from IT Department: You may have received a notice or communication from the IT department concerning your filed ITR. This could include a defective notice under section 139(9) or a notice for proposed adjustments under section 143(1)(a).

  • No Refund Due: The Income Tax Department has determined that no refund is due based on their assessment.

  • Crediting Issues: Even if your ITR has been processed and a refund determined, it may not be credited to your account due to issues like incorrect bank account numbers, inaccurate postal addresses, and similar discrepancies.

  • Outstanding Demand: If there is an outstanding demand associated with your tax profile, the Income Tax Department might process your return by adjusting it against the demand.


FAQs:

Q1. What does it mean to receive an income tax refund?

A: An income tax refund refers to the reimbursement of excess taxes paid to the government.


Q2. Can I track the status of my income tax refund?

A: Yes, you can usually monitor the progress of your income tax refund online through the tax authority's website or by contacting their helpline.


Q3. Are income tax refunds subject to taxation?

A: No, income tax refunds are generally not taxable since they represent a return of your own funds that were overpaid to the government.


Q4. When is the deadline to file the Income Tax Return (ITR) for the assessment year 2023-24 without incurring a late fee?

A: The due date for filing the Income Tax Return (ITR) for the assessment year 2023-24, based on the financial year 2022-23, is 31st July 2023, and no late fee will get charged if filed within this deadline.


Q5. I checked the status of my IT Return and it is displayed as ‘Refund Failure’. How can I apply for it again?

A: Log in to the income tax e-filing website.

Navigate to 'Services' and choose 'Refund Reissue.'

Create a refund reissue request.

Select the bank account number where you want the refund to be credited (if it has changed).

Ensure that the bank account is pre-validated.

Submit the request for refund reissue.


Q6. My bank account number has changed. I want to change the bank account number which I mentioned in my income tax return.

A: You can change your bank account number if your IT Return has a 'refund failure,' meaning your return was processed, and a refund was generated but not received.

Log in to the income tax e-filing website.

Go to 'Services' and select 'Refund Reissue.'

Create a refund reissue request.

Select the new bank account number where you want the refund to be credited.

Ensure that the new bank account is pre-validated.

Submit the request, and your new bank account will be updated with the income tax department for refund issues.


Q7. My Address has changed. I want to change the Address/ e-mail ID/ Mobile Number which I mentioned in my Income Tax Return.

A: Log in to the income tax e-filing website.

Navigate to 'My Profile' and choose 'Edit Contact.'

Provide the updated address, e-mail ID, or mobile number.

Submit the changes.

Your updated address, e-mail ID, or mobile number will be reflected in your profile and sent to the CPC (Central Processing Center) to update your income tax return.



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