3 min read
25 May 2021

Whether you need to pay income tax for a particular financial year or not, income tax filing offers you certain benefits. Firstly, your ITR serves as a proof of income, which is a prerequisite to avail a loan and other similar resources. Secondly, if you are a taxpayer, it allows you to claim a refund in case the taxes you have paid exceed your liability. Read on to know more about an income tax refund, the procedure to claim one, and how to check the refund status once you initiate the process.

A Brief Guide about Income Tax Refund Status

What is an Income Tax Refund?

For a particular assessment year, the actual income tax that you pay may exceed your tax liability due to various reasons. In such cases, you are eligible to receive an income tax refund from the Income Tax Department. For instance, your fixed deposit issuer may cut tax at source on your interest income even though you fall under the tax exemption limit. In such cases, you can claim an income tax refund for the excess amount.

When to Claim an Income Tax Refund?

Here are some of the cases in which you can claim an income tax refund.

  • When your TDS on various incomes exceeds your tax liability for an assessment year
  • When you pay a higher advance tax based on self-assessment than your liability that is calculated as per regular assessment
  • If you have not declared and submitted proof of your investments in tax-saving instruments and this results in additional tax
  • If you are taxed abroad and in India, in a nation with which India has a Double Tax Avoidance Agreement

How to Claim an Income Tax Refund?

You can claim an income tax refund when filing ITR for a particular financial year. Once you fill out the ITR form, the system auto-calculates your tax payable as per your applicable income tax slab, and also tells you the refund amount you qualify for. However, this refund is calculated based on the details that you enter and therefore, may not reflect the actual figure. The actual refund is calculated and paid to you only after the IT department processes your income tax return.

How do You Receive an Income Tax Refund?

If the income tax department owes you a refund, it pays the same to you in one of the following ways.

  • Credits the refund amount directly to your bank account via ECS or NEFT
  • Sends a cheque or demand draft by post to the address that you submit in your ITR

How to Check your Income Tax or TDS Refund Status?

To know your refund status follow these steps.

  • Visit the NSDL website by clicking here
  • Enter your PAN
  • Select the relevant financial or assessment year for which you want to check refund status
  • You can now view your tax refund status

You can also check your income tax or TDS refund status in your income tax e-filing account. All you have to do is log into your account, and click on ‘Refund Status’ under the ‘My Account’ tab.

What are the Different Types of Income Tax Refund Statuses?

Upon checking your income tax refund status via the e-filing or TIN NSDL portal, the system displays a result or a refund status. Here are what the various online tax refund statuses mean.

  • No e-filing is done: This can either mean that you have not filed your ITR for the financial year or that your submission was not successful. If your submission was unsuccessful, you can re-file your ITR return.
  • Not determined: This means that your income tax return is not processed, and you must wait for a few more days before you check your ITR refund status.
  • No demand, no refund:: his means that you don’t have any refund. If you feel that you are eligible for one, re-check your ITR and rectify errors, if any.
  • Refund unpaid: Your refund is not paid because you may have submitted wrong bank account details or an incorrect address. In this case, log into your e-filing account and correct the details. Submit a refund reissue request and then track refund status.
  • Demand determined: This means that the IT department denies your refund as you have not paid your taxes in full and there are certain outstanding dues. In this case, check for any mismatch or errors by comparing the notification sent by the tax department and your e-filing form. If there is a discrepancy, rectify it by paying your dues within the stipulated time frame. If there is no error, file a rectification and support your claim with the necessary documents.
  • Refund determined and sent out to refund banker: This means your claim for a refund is processed and its details have been sent to SBI, the refund banker. In this case, you have to wait for the banker to credit your refund.
  • Refund paid: This means that your claim for a refund is processed and the banker has initiated payment. To track the refund status further you must contact your banker.
  • Rectification processed, refund determined, and details sent to refund banker: This means the that IT department had notified you asking you to rectify your ITR. Your rectified ITR is processed and accepted, and your refund has been re-calculated and sent to the banker. Check your bank account to confirm receipt.
  • Rectification processed and demand determined: This means that the IT department had notified you to rectify your return. You have filed a rectification and has been accepted, but you still have to pay certain outstanding dues within the stipulated time frame. In this case, verify your return, pay the dues and check the ITR refund status after a few days.
  • Rectification processed, no demand and no refund: This online refund status means that your rectified ITR is processed, there are no outstanding dues and neither is a refund due.

Now that you know the ins and outs of an income tax refund, file your ITR carefully to stay tax compliant and reduce your tax liability as well.

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