It is mandatory to file your income tax return (ITR) for various reasons, especially if you have a tax refund to claim. Once you file your ITR, the income tax department does the assessment and refund, if any, gets credited directly into your pre-validated bank account.
When does a tax refund become due and how do I claim it?
According to income tax rules, tax needs to be deducted at sources of income at prescribed rates, by the payer. Sources of income can be: salary, interest, commission, rent, brokerage, professional fees, royalty, and others. So, in the case of salary, the rate of tax deducted at source (TDS) should be in line with the income tax slab applicable to the individual.
Once TDS is deducted, the same needs to be remitted into the account of the central government within a stipulated time. However, often, recipients of income do not make proper declaration of expenses and investments that can bring down their taxable income. As a result, excess TDS is deducted. Such additional tax paid can be claimed back as refunds, but only if you file your tax return. If you don't file your ITR, you can't claim a tax refund.
Do I earn any interest on the income tax refund due?
Where the income tax refund amount exceeds 10 percent of the total income tax paid, the government pays interest on the due amount under Section 244A of the Income Tax Act, 1961. Under this section, interest at the rate of 0.5 percent a month has to be paid on the refund amount, starting from the first day of the assessment year till the date of grant of refund.
How can I track the status of my income tax refund?
Once you file your ITR and claim a tax refund, you can check the status of your refund online through www.incometaxindia.gov.in or www.tin-nsdl.com. Log on to any of these two websites and click on “Status of Tax Refunds" tab, enter your PAN and the assessment year (AY) for which your refund is pending.
If the refund has already been processed by the department, you will get a message mentioning the mode of payment, a reference number, status and date of refund. If the refund has not been processed or has been declined, the message will say so.
What are the possible reasons for the delay in getting a tax refund?
There could be various reasons behind delay or decline of income tax refund by the tax department. The most common reason behind delay is usually incorrect bank account details put in the ITR form by assessees. While filing the ITR, bank details, including the name of the bank, account number, and the 11-digit IFS Code of the bank or details of international bank account number (IBAN) in case you have a foreign bank account, need to be mentioned correctly.
Also, ensure that the bank account selected to get the refund is pre-validated with the e-filing account and also linked with your PAN.
The other common reason for delay or not getting the refund is that there is a mistake in calculating the refund.
Can I rectify the mistakes before placing a request for re-issue of income tax refunds?
Don’t worry if the status report makes you realize that you have made a mistake in your bank account details while filing your ITR, because you will be allowed to make corrections in such cases. For this purpose, log in to the e-filing portal (www.incometaxindiaefiling.gov.in), go to “My Account" and then click on “Refund re-issue request." Follow the steps and enter the correct details of the bank account in which you want your income tax refunds to get credited, and submit the request. If your details are properly filled in the ITR, then you can expect to receive the refund within few days.