When you pay tax more than actual tax liability, you can claim income tax refund from income tax department. This case arises only when you have paid advance tax or self-assessment tax or tax deducted at source or foreign tax credit, etc.
Under section 237 of Income Tax Act, 1961, you can claim income tax refund if you have paid excess tax in a particular financial year. The amount of income tax that an individual can claim depends on verification by the tax department after ITR has been filed.
When can you claim Income Tax Refund?
Following are the instances, where you can claim income tax refund;
· When you failed to furnish investment proofs to your organisation and then employer deducts excess taxes as compared to actual tax liability in a particular financial year.
· Excess TDS was deducted on your interest income from bank FDs or bonds.
· The advance tax paid by you on self-assessment, exceeds the actual tax liability.
· In case of DTAA (Double Taxation Avoidance Agreement), you can claim income tax refund whenever it occurs.
How to claim Income Tax Refund?
· The process to claim income tax refund is uncomplicated and accessible. Individuals should note that there is no specific separate procedure to claim an income tax refund.
· Before applying for income tax refund, individuals should ensure that their return is electronically verified through Aadhaar number OTP, Electronic Verification Code (EVC) generated through the bank or physically verified by positing the signed ITR-V to the Centralised Processing Centre (CPC) within 120 days of filing the return.
· Individuals should also note that the excess tax for which a refund is claimed should reflect in the Form 26AS. Remember that the refund is subject to verification by the Income Tax department. It is credited only if the refund claim is found to be valid.
· The earlier you get the verification done; the earlier CPC will process your return. Once the returns are processed by CPC at primary level for arithmetical errors etc, refund will be issued to the taxpayer.
How to check income tax refund status?
There are two ways to check income tax refund status such as follows;
1. The Income Tax e-filing Portal
2. The NSDL website (easier way)
By using the income tax e-filing portal:
Follow below procedure to check status of income tax refund;
Step 1: Visit the income tax e-filing portal by clicking here
Step 2: Log into your account by entering the user id, password, captcha and then click on “login”.
Step 3: Click on “View Returns / Forms”
Step 4: Enter “Income Tax Returns” against “Select an option” and the relevant Assessment Year (AY) and click on “Submit”.
Step 5: Click on the acknowledgement number.
After following all the above procedure, the income tax refund status will appear at the last.
By using NSDL website:
Follow the below procedure to check status of income tax refund;
Step 1: Visit the NSDL website by clicking here
Step 2: Fill the specified details such as PAN, assessment year, captcha and then click on the "Proceed" as shown below;
Once you fill respective details, you will get know about your income tax refund status.
Interest on income tax refund
· When you delay filing your returns, the department imposes interest on you in the form of penalty. As like if due to any unavoidable circumstances income tax departments delays for income tax refund then you have a right to receive interest upon the same.
· As per section 244A of Income Tax Act, 1961, every assessee has a right to receive interest on income tax refund if they do not receive their refund amount within a stipulated period of time. This is payable by income tax department mandatorily if the refund is 10% or more of tax paid.
· In case any discrepancy arises in the interest computation, you may raise an online request for rectification of the same by log in to your account.