Tax refunds are something that quite a few of us have heard about. If you filed your taxes correctly in the past, then you would undoubtedly receive a refund based upon your financial submissions.
Tax refunds are handled by sections 237 through 245 of the Income Tax Act. Tax refunds are granted to taxpayers who have paid more taxes than their actual tax liabilities. The tax could take the form of advance tax, self-assessment tax, tax deducted at source, or tax collected at source.
Can I get a refund if I qualify?
In Section 238 of the Internal Revenue Code, taxpayers who pay excess tax need to claim a refund. The provisions below help taxpayers determine if their claim is eligible for a refund:
- Adding an individual’s income to that of another person, for example, combining the income of a minor child and his or her parents.
- In the event a taxpayer is not able to claim due to unforeseen circumstances such as insolvency, death, etc., his guardian or representative may be entitled to a refund.
- Employers and banks may deduct more TDS than the taxpayer’s tax burden determined by regular assessment if the deduction exceeds this burden
- An individual whose income is taxed both in India and in a foreign country (with which India has an agreement to avoid double taxation) may be eligible for a deduction or credit for taxes paid in both countries.
- ITR online apply benefits from investments that the taxpayer has not declared.
What Should I Do if I Want to Claim a Tax Refund?
An income tax refund can be claimed by filing a return of income. Aadhar number OTP, EVC generated through a bank account, or physically verified by posting the signed ITR-V (acknowledgment) within 120 days after filing the returns is required to verify the validity of the claim.
Getting a refund processed
At the initial level, the returns are processed by the CPC (centralized processing center), after which the returns are issued to the taxpayer. It is important to complete the verification process as soon as possible, even though the deadline for doing so is 120 days from the filing date. Your refund will be processed much faster if you complete the verification process early. E-verification is the best method for speeding up tax refund processing.
Refund Process Issues
When a taxpayer’s refund is not processed by the CPC for some reason or another, the record is transferred to the jurisdictional assessing officer after a certain time period. By submitting an official letter in this regard to the jurisdictional assessing officer, the taxpayer can follow up for a refund once this information is made available to them.
Income Tax Refund Interest Rates
- The interest rate on a refund under Section 244A is 0.5% per month. The interest is calculated from 1 April of the assessment year until the refund is issued.
- From 1 April till the date of the refund, an interest rate of 0.5% would be charged for TDS and tax collected at source or advance tax refunds. This is only applicable if the ITR is filed on or before the due date, otherwise, interest will be calculated from the date of filing the ITR.
- The interest rate on refunds of self-assessment tax would be 0.5% per month. However, the interest period will be from the filing date to the refund date.
- Refund amounts received often exceed refund amounts claimed on income tax returns. The additional amount is the interest on the income tax refund. There is a legal requirement for the income tax department to pay interest if the refund amount is more than 10% of the tax paid. If the refund amount is less than 10% of the tax, there will be no interest.
- There are instances when a refund may not be received within a stipulated period of time, in which case, the department must pay interest. In such cases, 3% interest is payable to the assessee or taxpayer.
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