Income Tax Refund, Eligibility and How to claim

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Fincrif India

Aug 14

05:34 AM

The amount issued or returned to the taxpayer when the tax paid exceeds the actual liability (including interest) is referred to as an income tax refund. Taxes deducted at source (TDS), advance taxes, self-assessment taxes, international taxes, etc. are all examples of paid amounts.

Income Tax Refund 


The amount issued or returned to the taxpayer when the tax paid exceeds the actual liability (including interest) is referred to as an income tax refund. Taxes deducted at source (TDS), advance taxes, self-assessment taxes, international taxes, etc. are all examples of paid amounts. 

According to the income tax and direct tax legislation, a refund occurs when a person pays more tax than is actually due. 

When submitting an ITR, the tax is calculated taking into account all deductions and exemptions. You can better comprehend the computation process by using the following formula.

Income tax refund is the sum of all taxes paid for the year (including advance tax, TCS, TDS, and self-employment tax) minus all taxes owed for the year.

Once we have a clear understanding of what an income tax refund is, we can move on to the parts that discuss how to acquire one, including qualifying requirements, deadlines, and other pertinent information.



Who is eligible for an income tax refund?


It is insufficient to understand merely how to obtain an ITR refund. The list of circumstances that qualify you to file an income tax return is provided below.


  • If the amount of tax paid in advance (based on self-assessment) exceeds the amount of tax due under the standard assessment.

  • If your TDS from interest on dividends, securities, or debentures is higher than the payable tax under the ordinary tax. Additionally, you need to understand how to request a TDS refund.

  • If a mistake was made during the assessment process and was eventually fixed, the tax payable on the regular assessment will be reduced.

  • If you have any international assets, such as foreign bank accounts, financial holdings, signing authority, financial assets, etc., you must declare them on your ITR.

  • If you have unreported investments that produce tax advantages and deductions.


When the payable tax is negative after reviewing the taxes you paid and deductions you were permitted, you may still be eligible for an income tax refund in this situation.



How to claim an income tax refund?


The Income Tax Department will initiate the refunding process automatically based on your eligibility if you filed for an income tax refund using the correct procedure. But if this is your first time applying, the process below will be very helpful. How to acquire a TDS refund online can be done using the same procedure.   


  • Access the IT Department's main webpage by logging in.

  • Create an account with your PAN card so you may subsequently use it as your user ID.

  • Navigate to the "Download" page and choose the Assessment Year and ITR form there.

  • Open the attached excel file and enter all the pertinent data requested in Form 16.

  • The excess amount will be calculated and displayed in the ITR form's "Refund" column if you have paid more tax than your tax obligation.

  • Check and confirm each and every detail. After that, your device will produce and save an XML file. Whether you correctly filled out this form will determine how long it takes to receive your income tax refund.

  • To submit a refund, click the "Submit Refund" button and upload an XML file to the tax portal.


You must e-verify the ITR after a successful ITR filing. E-verify your returns to make sure you receive the refund; if you don't, the procedure won't be finished.


Please be aware that the ITR form's refund amount is purely based on the information you submitted.Your submitted documentation will be independently verified by the IT Department, after which the amount of your reimbursement will be determined. In this instance, the actual refund amount and the amount indicated on the ITR form may not match.



How is the payment of income tax refund made?


The income tax refund payment methods are shown below, and you will receive your part via one of them.


  • The immediate deposit of the refund sum in the taxpayer's account.

  • Refund by cheque.


Let's talk about the procedure as a whole.


  • Directly depositing the return sum into the taxpayer's account: The most typical technique of returning extra tax that taxpayers have paid is this one. The NECS/RTGS is used to conduct these transactions.


Taxpayers must verify that the information provided on the ITR form regarding the applicant's bank account is accurate. One can anticipate a prompt reimbursement sent right to their bank account if all the necessary information is provided. 


  • Cheque refund: Writing a cheque is another way to get your income tax return. If the provided bank account information is inaccurate or incomplete, the IT Department typically uses this procedure.


Here, the government sends a check to the bank account specified in the ITR form. By getting in touch with the speed post, people can find out the progress of their checks. You should always have your reference number from the IT Department on ready for that.



How is the income tax refund paid by the income tax department?


The department of income tax has a number of options for disbursing the refund. These are the subsequent methods:


Via the internet using RTGS or NEFT


The most popular method of receiving a tax refund is by far this one. Your designated bank account will receive a direct credit for the refund amount from the income tax department.


Checks are written offline


Obtaining the ITR refund through cheque is an additional option that is accessible. A cheque is created and issued in the taxpayer's name by the income tax division. The cheque is an account payee cheque, though, and can only be cashed by adding money to your bank account.



Interest on the delay of income tax refund


If the income tax department waits too long to pay the ITR refund, it will be required to pay interest in accordance with Section 244A of the Income Tax Act of 1961. On the unpaid portion of the return, interest would be paid at a rate of 0.5% per month, or a portion thereof. The interest would only be required in situations where the refund was the result of an overpayment of advance tax or TDS deductions. The interest will be calculated beginning on April 1 of the assessment year and will continue up until the refund is actually transferred to your bank account.




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