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Income Tax Refund: What is IT Refund and How to Claim It?

  • Highlights

  • Claim an IT refund if tax paid exceeds your liability

  • Initiate a tax refund by filing ITR and e-verifying it

  • Delay in refund payment will fetch you interest

  • Check your refund status online by using your PAN card

A report by The Economic Times states that this year onwards, you must pre-validate your bank account and link your PAN with it in order to claim an income tax refund. Additionally, the only way to get back excess money paid to the government is to apply for a tax refund online. An IT refund is possible when the amount you need to pay the tax department is less than the amount that you have already paid.

While you may be well-versed with how to file income tax returns, you may not know what to do in case there is such a mismatch. Read on to know what is a tax refund, how to get one, and how to check an income tax refund status online.

A Brief Introduction of IT Refund

Income Tax Refund

Income tax refund refers to a process wherein you make a claim to the government for reimbursement of any excess money that you have paid as tax. In simple terms, you are eligible for an IT refund when the amount of tax paid during a financial year exceeds your total tax liability. The provision for an income tax refund is specified in Section 237 of the Income Tax Act, 1961. After scrutiny and verification of your claim, the Income Tax Department issues a refund order.

Now that you know what an income tax refund is, learn about how to get one online.

Process to Claim Income Tax Refund

If you’re thinking about how to get an income tax refund, the good news is that there isn’t any special system that you need to follow. Moreover, you do not have to have to submit a separate income tax refund form to make a claim. All you need to do is file your income tax return. Follow this up by verifying your returns online or physically through form ITR-V within 120 days of filing income tax returns.

Post this, your claim is scrutinised by the Centralised Processing Centre, and if it’s free of errors, a refund will be issued. It's important to know that e-verification is preferable as it hastens the income tax refund process, which tends to take around 3 to 6 months from the time you e-file your ITR. As per a recent update, you can file your ITR for FY 18–19 by 31 August 2019. If free of discrepancies, your ITR status will show up as ‘ITR processed’.

Today, the online income tax refund method is the only one you can use. Also, it’s vital that you fill out your ITR form carefully, as your refund is calculated on the basis of the data you enter. For instance, in the event that you fail to mention investments via Form 16, you may end up paying more tax than you need to. In such cases, to claim an income tax refund, Form 30 comes into the picture, allowing you to request that your case be considered.

Having understood how to get an income tax refund, learn about the eligibility terms required to make a claim.

Eligibility Criteria for Income Tax Refund

In simple words, you qualify for an income tax refund when you have paid the government more tax than you need to. That said, here are a few cases in which you would be eligible for a refund.

  • When the tax deducted at source (TDS) exceeds your tax liability. For instance, if the amount of tax you need to pay after assessment is Rs.27,000 and your employer deducts Rs.32,000 as tax at source, you can claim a refund of Rs.5,000.

  • In the event that you have made investments that offer deductions that you have not declared to the Income Tax Department.

  • If your income is also taxed in a foreign country with which India has an agreement, you can make a claim to avoid double taxation. For instance, in case you have an NRO account with an Indian bank and qualify to be exempt from taxation as per the double taxation agreement, you can claim a tax refund amounting to the tax deducted at source by the bank. Normally, banks cut tax at source when paying you interest as per the income tax slab rate that applies to you.

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Time Period for Claiming an Income Tax Refund

As a general rule, you must claim an IT refund within a year from the end of the assessment year. Nevertheless, in certain scenarios you can extend the time limit. However, even in such cases certain conditions must be met. For instance, the refund amount for the assessment year must be less than Rs.50 lakh.

Interest Applicable on Delayed Income Tax Refunds

In the event of a delay in refunding the excess taxes paid, you may find that the amount you finally receive is more than what you were anticipating. This is because the Income Tax Department issues a refund with interest when the refund is at least 10% of the taxes paid. The provision for this is specified under Section 244A of the IT Act and the interest that you enjoy is 0.5% per month or 6% per annum.

How to Check your Income Tax Refund Status

Made a claim and wondering how to check the income tax refund status? You can do so via the two options listed below.

  • You can check your refund status on the e-filing website

  • You can check your refund status on the TIN NSDL website

To check it on the e-filing website, log in to your account on www.incometaxindiaefiling.gov.in by entering details like your date of birth, PAN and password. Then, select 'View Returns/Forms'. Navigate to 'Income Tax Returns' and select the appropriate assessment year. Finally, select your acknowledgement number to view your refund status.

To check it on the TIN NSDL portal visit https://tin.tin.nsdl.com/oltas/refundstatuslogin.html, enter your PAN and select the assessment year. A message will appear showing you your refund status.

Now that you know how to get an income tax refund, file ITR, pre-validate your bank account, link it with your PAN and make a claim well before the assessment year ends. Once you do so, track its status to know if you need to furnish any extra details.

Additional Read: How to apply for PAN Card Online on TIN-NSDL

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