Steps to take when your Income Tax Refund stuck
Unfortunately in our country, many honest tax-payers have pending income tax refunds. Whether it’s the Income Tax (I-T) department’s lethargy or the growing number of tax payers, delayed refunds remain high on the list of complaints against the department. One of the challenges for any tax payer is getting a refund, because it is a lengthy and time-consuming process.
Ideally, once you file your returns, the I-T department has to verify the information and any excess tax paid is supposed to be automatically processed and refunded. A cheque is supposed to be sent to the assessee’s address in four months. The amount can also be credited to his bank account (through electronic clearing system or ECS), if he has chosen the option.
However, the ECS option, which was introduced under the Refund Banker Scheme in 2007 to implement speedy redressals of refund issues, does not cover the salaried tax-payer in Mumbai ,though it covers 14 other cities.
The problem arises when the four-month period – as prescribed by the Central Board of Direct Taxes – stretches to, well, years. In fact, even the interest penalty (calculated at six per cent from April 1 onwards) for any delay has not helped matters.
I-T officials plead not guilty. “The technical problems relating to our systems actually cause the delays. At times, wrong computation of tax or even an incorrect address can lead to delays,” said an official.
Since high technology fails to live up to the promise of speedy refunds, you must resort to the good, old letter-writing art, and hope the postal route (a registered post) can make up for the technical snag.
But before you pick up the pen, you can go to the tax department, or NSDL-TIN (National Securities Depository Limited-Tax Information Network) websites. Alternatively, you could use the help desk of State Bank of India.
Here are a few things to do:
- Any defective filing from your/I-T’s side has to be solved by a rectification letter. If the issue is cleared, you will get your pending refund.
- If there are no defects, you need to write a letter, along with copies of returns, to your Assessing Officer (AO), informing him.
- No response in 10 days? Write another one. This time, to the Additional Commissioner of Income Tax (A-CIT). Attach a copy of the earlier letter to the AO.
- Write another letter to the Grievance Department, with copies of letters to both AO and A-CIT.
- Sometimes, a visit to the officers concerned may help sort matters earlier.
Cases are normally sorted within a month. If not, approach the nearest I-T Ombudsman’s office. The Ombudsman will write a letter directly to the I-T Commissioner, seeking details of your case.
This measure works most of the time, with results within a month or three at the most. The Ombudsman has had a record of solving about 75-80 per cent of issues till date, says an officer from there in Mumbai.
Common Reasons for delay in Income tax Refund
1) Mismatch in TDS data - If the TDS details in your form do not match the data with the Income Tax Department, expect your refund to be put on the backburner. Verify the TDS details online before submitting the form.
2) Wrong address - Though direct credit of refunds has removed this problem to a large extent, there are still some taxpayers who give wrong addresses and then wait for refunds.
3) Missing bank account details - You are supposed to give your bank account number and its MICR code for direct credit of refunds. If there is an error, your refund gets stuck.
4) Late submission of ITR V - The return is not filed until the ITR V reaches the CPC in Bangalore. Don’t expect any refund if the ITR V has not been filed.
5) Large number of TDS entries – If there are lots of TDS entries (some taxpayers can have up to 70-80 entries), your assessment may take a little longer. Obviously, the refund also gets delayed.
(Article Was last Published on 29.03.2012 and Republished on 04.07.2012 with Amendment)