Taxpayers may be eligible for a refund if they end up paying more than their share of tax during a financial year. The excess payments may have been made through tax deducted at source (TDS), advance tax, or other such mechanisms. If you are entitled to a refund, you have to file your income tax return (ITR), verify it, and follow up on the income tax refund status.
Process for claiming income tax refund
- File and verify your ITR. Most individual taxpayers can complete the process online.
- After verification, the Income Tax Department (ITD) will cross-check your ITR details. If they find that a refund is due, they will issue a refund order.
- The day after the ITD completes the return processing, it will transfer the refund to the refund banker. The banker will then transfer the refund payment to you in either of two ways:
- By sending a cheque to your address (as mentioned in the ITR)
- Direct credit to your bank account via electronic clearing service (ECS)
Recently changed your bank account or address? Intimate the ITD in advance to avoid non-delivery of the refund.
Checking income tax refund status
Start by visiting the refund status page at https://tin.tin.nsdl.com/oltas/refundstatuslogin.html. Next, enter your PAN, the assessment year, the captcha image, and hit ‘Submit’ to display your refund status. Alternatively, you could view the status by checking Form 26AS for the tax credit statement.
Now, let’s look at the different statuses you might encounter and how to respond:
- Refund had expired: Request for re-issue of the refund via the e-filing portal. If you filed your ITR manually, contact the assessing officer.
- Refund had returned: Perhaps the cheque went undelivered at your address or your bank details were incorrect. Either get in touch with the assessing officer or submit a request for refund reissue on the e-filing portal.
- Return paid: There could be a delay from the bank’s end. Check with the refund banker in this case.
- No demand, no refund: The ITD may have found that no refund was due. If you disagree, file for rectification by submitting your income and investment proofs.
Troubleshooting income tax refund issues
- Refund not processed: Sometimes the ITD might not process your ITR completely. Get this to your assessing officer’s notice by submitting a letter. Make sure to follow up on the issue.
- Refund higher than expected: The ITD is mandated to pay interest at the rate of 0.5% per month or part thereof if your refund is 10% or more of the tax paid by you. The interest computation starts from 1 April of the assessment year and continues till the date on which the refund is paid.
- Adjustment against outstanding tax: If you have outstanding tax from a previous year, the ITD might not issue the full refund to you. It will send you an intimation of the same under Section 245. If you do not respond within 30 days, the ITD will go ahead with the adjustment.
As the ITD has a huge number of ITRs to process every year, do yourself a favour: File and verify your ITR well in advance. Delay the verification and the processing of your ITR will get delayed. This will push back the issue of your income tax refund too.