Income Tax Refund – Concept, Process to Claim, Limit, Status & more

In this article, you will find basic details about Income Tax Refund, the process of claiming a tax refund.

Then we will cover the factors which can make you eligible for a refund of tax. The article will also help you understand different refund status and various other aspects.

Do you owe a refund from the tax department of our country? Have you paid tax in excess of your actual tax payable amount?

Do not worry; the tax refund is a common phenomenon and our tax department releases refund without much hassle.

Here in this article, we will help you to understand tax refunds in detail. Since the tax refund is an integral part of paying taxes, it important to understand the same properly.

So, let us begin with the basics of tax refund and then dig deeper into the same.

About Income Tax Refund

As per section 237 of the Income Tax Act 1961, you can claim a refund of your excess tax.

If you have paid tax or tax has been deducted at source and your actual tax due (tax liability) is lesser than the tax paid, then you can claim a refund.

The Income-tax department returns the amount paid in excess to the taxpayer within a particular financial year. You need to file ITR for claiming a refund.

The income tax department will verify and then process the claim. Then you will get your refund credited.

We will be discussing the whole process in detail in the latter part of the article.

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When & Who can Claim an Income Tax Refund?

In India, you become eligible for a tax refund in case –

• The advance tax as per self-assessment is higher than the actual tax liability. Suppose, you have paid tax in advance by doing a self-assessment. Now, when your actual tax liability is calculated, the amount is lesser than the tax you have paid. Then you can claim a tax refund.
• Your TDS or tax deducted at source is higher than your tax liability. You might have to pay TDS at the bank for interests on deposits, employer, and other sources. If the TDS amount is greater than your final tax liability, you can claim a refund.
• Your income is taxed in a foreign country as well as in India. However, this is applicable if India and the other country has an agreement of no double-taxation.
• Your assessment of tax payable was incorrect. So, if under regular assessment of tax, the amount you paid towards tax is higher than the amount as per correct assessment, then you can claim a refund.
• The tax payable is nil after allowing the deductions but you have paid tax already.
• Finally, you can declare your investments (tax-free) and other deductions that you haven’t yet before paying tax or TDS deductions.

So, in all these cases mentioned above, you can claim a refund of tax. The IT department will verify the claim by processing it and going through other documents.

If your claim is correct, then you can expect the refund sooner or later into your registered bank account.

What is the Process of Claiming a Tax Refund?

Now, as you know whether you can claim or not a refund from the tax department, you must know how to claim it.

The process of claiming the refund is simple and can be done within a few minutes. The process is as follows –

• Firstly, you have to calculate your actual tax liability.
• Then you have to calculate the tax which has already been paid.
• Then you have to file ITR. Here, the tax liability should correctly reflect.
• In the form 26AS, you must reflect the amount of refund claim.
• Now, once you submit the ITR for verification, the IT department will verify the same. You need to submit the verification form within 120 days of e-filing.
• Finally, if the IT department approves the claim after processing your ITR, you will get a refund. The refund comes via bank/direct transfer.

How to Check Income Tax Refund Status Online?

So, by now you must have claimed your refund from the IT department, isn’t it? However, you do not know whether your claim has been processed or not, right?

So, here we will discuss how to check the refund claim status online.

The process is easy and here you go –

• First, you have to visit the NSDL Website. Here you can track your refund.
• In the next step, you have to fill out some details like PAN number and assessment year.
• Then you can see your refund status on the screen.

OR

• You can directly login to the e-filing website of the IT department.
• Select the option – ‘View Returns/ Forms’
• Then go to ‘My Account’
• There you have to select ‘Income Tax Returns’ and submit
• Once you submit, you have to enter an acknowledgment number.
• If you enter the number correctly, you will be able to see the status of your refund claim. So, finally, the refund status will appear on the screen.

Things to know while checking Income Tax Refund Status

Are you confused about the status of your refund claim? Are you not able to understand whether the claim is processed or not?

You need not worry as here, we will help you decipher different income tax refund status.

• Firstly, if you see ‘Refund Paid’, this means your refund has been credited to your account. Here you have to check your bank account for verification though. If you haven’t received the amount, you have to contact your bank.
• Secondly, the refund status may show ‘No Demand No Refund’. This means your tax liability matches tax payment. So, you do not have to pay anything nor get any refund.
• Then it may show ‘Refund Determined and sent out to Refund Banker’. In this case, the IT department has accepted your claim for an income tax refund. The refund banker has got an intimation. You may contact the refund banker for the credit in your account or just wait for the refund to get credited.
• Another status can be ‘Refund Unpaid’ which generally happens because of incorrect bank details provided for refund. In that case, you have to correct your bank details or address (in case you have opted for a refund via cheque) and request a reissue of the refund.

Further insights on other types of Status

• In case you see the status as ‘Demand Determined’ then you have to pay tax to the IT department. This simply means, the tax liability is more than the tax paid and you need to pay more to fill the gap.
• You may also see the status message as ‘Rectification processed, refund determined and details sent to refund banker’. This means your rectified return has been accepted by the IT department. They have approved your refund claim and sent it to the refund banker for processing.
• In case you see ‘Rectification processed and Demand determined’ then again it means your rectified ITR shows tax liability over tax paid and you have to pay the due.
• Finally, you can see a status where it is mentioned ‘Rectification processed, No demand and no refund’. So, here your rectified return shows your tax payment matches your tax liability. This means you do not have to pay any further tax for the year but you are not eligible for any return as well.

Is there any time limit for claiming the Tax Refund?

The time limit for claiming a refund is the same as filing your ITR. Once you file your ITR and claim a refund in the same, it will be processed.

So, there is no particular or separate timing or deadline for claiming the refund.

The sooner you file ITR, the faster your refund will be processed and you can get the credit in your bank account. So, it all depends on the timing of filing ITR.

Special Cases of Tax Refund

• In case of death, insolvency or incapacity, or any other such reasons, if anyone cannot claim a refund, then his or her guardian, legal representative, trustee, or receiver can do the same on their behalf. It is as per section 238 of the IT Act 1961.
• Similarly, the parents of a minor child can claim a tax refund in case a minor child’s earning is included in the total income of the parent.

Is there any Interest Amount Received in case the Refund of Tax is Delayed?

Yes, if the refund amount is equal to or more than 10% of the total tax paid, then the IT department pays interest on the same.

As per section 244A of the Income Tax Act, 1961, the rate of interest is 0.5% and it is simple interest. It is given on monthly basis.

It is calculated from the 1^st of April of the assessment year. However, if you file a delayed return, then it is calculated from the date of filing.

The interest is paid till the day of refund claim is approved/accepted.

What can you do if your Refund Remains Unprocessed?

In case your refund is not processed even within 3-4 months of filing the ITR, then you need to contact the CPC, Bangalore for the same. This might be a case of not verifying your ITR till that time.

CPC is the Central Processing Centre of the IT Department. You can call them on 180042500025 or 080-26500025. Then you can ask them the reason for the delay and sort the issue.

Setting-off/ Adjustment in Tax

Under section 245, the tax department has the right to settle your refund amount against any tax payable by you (outstanding amount).

The IT department will send you an intimation of the same in writing before adjusting any amount by themselves.

Scam Emails for Tax Refund

There are many scam emails sent by a various organization mentioned that you can claim a refund of your tax and such things.

Do not ever fall for any of these emails as these are scams and can pose threat to your online transactions and other online presence.

Especially, these emails ask for bank details, phone numbers, and other details. Do not ever share such details or any OTP to these ids/mails.

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Income Tax Refund – Conclusion

We can summarize it by saying that claiming your income tax refund is easy. All you need to do is to file your ITR even if your income does not fall in the taxable bracket.

There are many cases where TDS is deducted even when the income range is not taxable.

So, for claiming all the hard-earned money that you do not owe to the government, you must file ITR and claim a refund in Form 26AS.

Income Tax Refund FAQs

Ques: Is ITR filing mandatory for claiming a refund?

Answer: Yes, without filing ITR, you cannot claim a refund. In this era of e-filing when everything is online, filing ITR is mandatory for claiming a refund.

This is because you do not claim a refund separately, right? So, how can you claim it without ITR!

Ques: When can I get my refund credited?

Answer: Once you file the ITR, your ITR is processed by the IT Department. After processing, they approve or disapprove your claim for refund as per your tax liability and tax is already paid.

So, if you are eligible for a refund, then your refund gets credited within a few weeks to four months. However, in case of any incorrect information, then it may need your intervention.

Ques: Does the Income-tax refund amount is taxable?

Answer: No, certainly not. This is the tax that you have paid in excess out of your income which is already calculated within the taxable income.

So, there is no extra tax you have to pay for the tax refund amount as it is not an extra income you are generating.

Ques: I have missed the due date for filing ITR and claiming the refund, what can I do?

Answer: You can file a belated return and there you can claim your refund.

Ques – How to rectify any mistakes in the name, account number printed on the refund cheque delivered to me?

Answer – In case of incorrect account number the refund will be directly rooted back to the IRS and the individual will receive a paper check from the IRS to request a re-request of the ITR. Individuals can then provide with the correct account number/name or any such mistakes, however a further delay of two weeks or more should be expected for the ITR.

Ques – How to claim income tax refund after the due date?

Answer – In order to claim one’s Income Tax Return after the due date of that very financial year i.e. 31^st July, the individual is expected to issue a belated return to claim their tax refund.

Ques – How to change account number in income tax refund?

Answer – The account number can be easily changed just by a click of your cell phone, thanks to the latest technology. Individuals are supposed to login in the ITR e-filling website and choose ‘refund re-issue’ from my account. They can then change their account number.

Ques – How to know your income tax refund amount?

Answer – One can now easily get to know about their Income Tax Refund amount by logging in to the official income tax portal.  You just need to click ‘view 26AS’ from my account which will further take you to TRACES portal where you can choose the assessment year of concern and get your ITR information.

Ques – How to link a bank account to income tax refund?

Answer – You can link you bank account, add address details to your Income Tax Refund by simply logging in to the official portal providing your credentials and choose ‘my account’ where you can make relevant changes and also add your bank account details.

Ques – What is an Income tax refund?

Answer – When an individual have paid more tax than the actual calculated tax, they file for an Income Tax Return, the individual then receives an ITR from the government.

Ques – When will we get an income tax refund?

Answer – The entire procedure to obtain one’s ITR has now been online. Once an individual has filed their Income Tax Return claim; the entire verification needs to be done with in the 120 days of making the claim.  After the completion of the verification, an individual can expect their ITR to return in 30-45 days.

Ques – How to check income tax refund status for this FY?

Answer – In order to check the Income Tax Return status the individuals need to visit the official Income Tax website, where they need to enter their PAN card details, further which, they need to select the concerned assessment year after which the screen will show the current ITR status.

Ques – What is the helpline number for income tax refund related queries?

Answer – Government has given various helpline numbers to solve individual queries; concerned individuals can call the helpline no. – 1800 103 2255 or 91-80-46605200.

Ques – Is there any time limit for claiming the Tax Refund?

Answer – The set limit for claiming an ITR is of around 2 years.  Ones the given time limit is passed the ITR cannot be filed.

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