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When your cash is stuck with the I-T
July, 22nd 2010

When Ajay Thakker, a self-employed graphic designer, filed his returns for 2008-2009, his tax deducted at source was Rs 95,000. His actual tax payout worked out to Rs 44,000. This entitled him to a refund of Rs 51,000. A year later, he is still waiting for this amount.

Unfortunately, many honest tax-payers like Ajay have pending income tax refunds. Whether its the Income Tax (I-T) departments lethargy or the growing number of tax payers, delayed refunds remain high on the list of complaints against the department. Homi Mistry, tax partner, Deloitte Haskins & Sells, says, One of the challenges for any tax payer is getting a refund, because it is a lengthy and time-consuming process.

Ideally, once you file your returns, the I-T department has to verify the information and any excess tax paid is supposed to be automatically processed and refunded. A cheque is supposed to be sent to the assessees address in four months. The amount can also be credited to his bank account (through electronic clearing system or ECS), if he has chosen the option.

However, the ECS option, which was introduced under the Refund Banker Scheme in 2007 to implement speedy redressals of refund issues, does not cover the salaried tax-payer in Mumbai, though it covers 14 other cities.

The problem arises when the four-month period as prescribed by the Central Board of Direct Taxes stretches to, well, years. In fact, even the interest penalty (calculated at six per cent from April 1 onwards) for any delay has not helped matters.

I-T officials plead not guilty. The technical problems relating to our systems actually cause the delays. At times, wrong computation of tax or even an incorrect address can lead to delays, said an official.

Since high technology fails to live up to the promise of speedy refunds, you must resort to the good, old letter-writing art, and hope the postal route (a registered post) can make up for the technical snag.

But before you pick up the pen, you can go to the tax department, or NSDL-TIN (National Securities Depository Limited-Tax Information Network) websites. Alternatively, you could use the help desk of State Bank of India.

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