The due date to file an ITR return is 31st July 2024 for non-audit cases and for cases requiring an audit, the due date is 31st October 2024. When the Income tax return filing season is over, the wait for income tax refund is at peak. Let’s understand various matters related to an income tax refund.

What is an Income Tax Refund?

When a taxpayer makes an excess payment of income tax to the government against its actual income tax liability for a given year, the income tax department refunds the excess amount paid after due assessment. This refunded amount is known as an ‘Income tax refund’.

When can you Claim an Income Tax Refund?

The following are situations when an income tax refund can be claimed:

• Excess TDS deducted from salary income- 
  • The employer generally deducts taxes after considering various documentary proofs provided to him by an employee pertaining to, say, 80C investments, medical insurance premiums under 80D, etc. However, there are instances where an employee cannot furnish proof for a few such investments before the end of a particular financial year. Accordingly, the employer goes ahead with a higher deduction. However, the employee can claim the benefit of such investments while filing their return of income and therefore claim a refund of the higher taxes paid,
  • Certain individuals may not fall within the taxable bracket at all, i.e. their income would be less than Rs 2.5 lakh. Hence, they would not have to pay any taxes. Yet, taxes would have been deducted from their income. This being so, they can claim a refund of the excess tax deducted;
• Excess TDS was deducted from your interest income- Banks may deduct TDS on interest accrued on FDs or bonds if the amount exceeds the threshold limit specified in the Income Tax Act.
• Excess advance tax paid- The advance tax paid on the basis of self-assessment was more than the actual tax liability for the given FY. This advance tax can be claimed as a refund while filing ITR.
• Taxpayers may be called upon to pay additional taxes- The income-tax officers may make certain additions to taxpayer’s income during income tax proceedings. Such additions may be deleted by appeal authorities. Accordingly, the taxpayer will be refunded the taxes he would have paid.
• In case of income taxable in more than one countries i.e income is doubly taxed – This situation can arise when a person is a citizen of one country but receives income from another country. However, India has entered into a Double Taxation Avoidance Agreement (DTAA) with many countries wherein the agreement allows you to claim a tax refund if you are a non-resident Indian and your income is taxable in other countries. Any payment of excess tax can be claimed as a refund under this DTAA agreement.

How to Claim an Income Tax Refund?

An income tax refund can be claimed simply by filing ITR. Please note that the IT department will process the ITR for refund only if the ITR is verified through any of the online modes or by offline mode (sending a signed copy of ITR-V). Further, the refund from the IT department is subject to assessment/verification by the IT department. A refund is received only if the refund claim is found to be valid and legitimate.

How Much Income Tax Refund is Received by the Taxpayer?

When a taxpayer claims a refund in his return of income, the tax department processes such a return and the taxpayer would receive an intimation from CPC under section 143(1) which will confirm the amount of refund that the taxpayer is eligible to receive. The refund can either match with or it could be higher/lower than what is claimed in the return of income based on assessment done by the income tax department. This refund amount is what the taxpayer would ideally receive from the income tax department.

How to Check for Refund Status?

Once the refund is determined, the same will be processed by the tax department. The status of the refund can be checked either from:

• The income tax e-filing portal, or
• The NSDL website

Using income tax e-filing portal

Step 1: Visit the income tax e-filing portal by clicking here

Step 2: Log in to your account by entering the user ID (PAN) and password.

Step 3: Click on ‘e-File’, select ‘Income Tax Returns’ and click on the ‘View Filed Returns’ option.
 

Step 4: You can check the status of the current return filed as well as the previous returns filed here. 

Step 5: Click on ‘View details’.
 The income tax refund status appears as shown in the below screenshot
 

Using NSDL Portal

Step 1: Click here which takes you to the NSDL website for checking of the refund status

Step 2: The below screen appears where you can feed in details of your PAN, the AY, the captcha, and then click on ‘Submit’.

Once this is done, the below screen appears which shows the status of your refund in the following manner
 

Understanding Various Income Tax Refund Status

Within What Time Limit can Income Tax Refund be Claimed?

A taxpayer can claim an income tax refund only when the income tax return is filed. As the process of claiming an income tax refund depends on ITR filing, the time limit for claiming an IT refund is the same. For any AY, the latest time limit for filing your returns and claiming a refund is the 31st of December of the assessment year. For example, for AY 2024-25, the last date to claim an income tax refund is 31st December 2024, which is also the last date for delayed filing of ITR for FY 2023-24.

Income Tax Refund on Appeal

When the taxpayer is eligible for a refund due to any order passed in response to an appeal, then there is no requirement of making a claim for such refund amount as the ITR department will itself credit the amount of refund. In short, there is no requirement for the taxpayer to place any additional request for refund cases related to appeal.

Please note that if the assessment of taxpayers’ return of income was cancelled with a decision to make a fresh assessment, the refund shall become due only after making the fresh assessment.

Interest on Income Tax Refund

Section 244A deals with interest on income tax refund and provides for interest at the rate of 0.5% per month or part of the month on the refund amount. Such interest shall be calculated from 1st April of the assessment year till the date of grant of refund if the refund is due to excess advance tax paid or TDS deduction.

Is Income Tax Refund Taxable?

An income tax refund is not taxable because it is the excess of tax liability paid from the total taxable income considered for tax liability for a given year. However, interest on an income tax refund is taxable as income from other sources.

Set-off of Income Tax Refund

If there is an income tax liability for different FYs along with a refund for current FY, the assessing officer or commissioner can decide to set off the refund amount against the liability.

Income Tax Refund Helpline

In respect of any queries related to an income tax refund, you submit your grievance on the income tax portal. After logging in to the income tax e-filing account, go to ‘Grievances’ and click on ‘Submit Grievance’. Now, you can submit the details of the query.

Important Points About the Income Tax Refund

• Verify you have pre validated bank account details where you want the refund to be credited.
• File your ITR before the due date for speedy processing of income tax refund.
• Download your form 26AS and verify that the amount excess paid in tax is reflected in 26AS.

What are the Possible Reasons for the Delay in Getting a Tax Refund?

There could be various reasons for the delay in refunds. We could list some of the reasons which could delay the refund:

• Non-verification of the income tax return- Return filing is incomplete in case it is not verified. So make sure ITR is verified within 120 days of filing your return. The returns filed on or after 1st August 2022 must be verified within 30 days. The later you verify, the later will be the refund.
• Manual filing of Income tax return- In case income tax is not filed online, processing of refund could take longer than e-filing of return.
• Lastly, in case the income tax department feels that there is some underreporting of income, there is a possibility they scrutinize the return which may be the reason for the delay of refund.

Can I Rectify the Mistakes before Placing a Request for a Re-issue of Income Tax Refunds?

If you have received an intimation from the income tax department and there is a refund failure, you need to follow the below guide. You will have to submit a refund re-issue request in your income tax department’s website login and update your correct or new bank account number.

• Login or Register on the income tax website
• From the top Menu, select ‘Services’ >> ‘Refund Reissue’
• On the ‘Refund Reissue Request page, choose the ‘Create Refund Reissue Request’ option. 
• Tick the box and confirm the acknowledgement number and press ‘Continue’.
• Now Check the Bank Name where you expect the refund amount. Tick the box and click on Proceed To Verification.  
• Now simply e-verify with options available. For example, Aadhaar OTP or net banking.
• Once the request is successfully submitted, you can click on ‘View Refund Reissue Requests’ to view the request sent.