Claim Interest on Income Tax Refund for delay

DELAYS AREN’T DENIALS –Before getting into the actual process, it is important to know some of the reasons that may have caused the delay in Income Tax Refund. If your bank account details or your PAN number is entered incorrectly in the form or you end up filing your tax in the wrong ward/circle, then the chances for delay in issue of your Income Tax Refund are high.

Tax authorities have especially been known to cause delays in cases where the Income Tax amount to be refunded exceeds Rs 5 lakh, citing additional approvals as the reason. Delay could also be caused if litigation is pending against the refund claimed or against any other issues with higher level of authority. For instance, if an individual is in appeal with Commissioner of Income Tax (Appeals) against an order passed by the assessing officer (AO) level, in our experience, the refund is generally not issued by the AO even though there is nothing in the law to this effect.

REMEDIAL ACTION  – Moving on to the actual process. In ideal circumstances, you should be able to trace the status of your refund online at the Income Tax E-Filing  website using your PAN number and entering the year for which you are to get the refund.

To view Income Tax Refund/ Demand Status, please follow the below steps:

1. Login to e-Filing website with User ID, Password, Date of Birth / Date of Incorporation and Captcha.

2. Go to My Account and click on “Refund/Demand Status”.

In case you do not get refund through ECS in your bank account than, you can also apply to your Assessing  Officer in Form 30, and attach a copy of the tax return filed, a copy of the withholding tax certificates and proof of tax deposited as advance tax or self-assessment tax. However, if you get no response from the assessing officer, then you will need to take this up further with a higher authority.

As the next step, the individual should write a letter to the Chief Commissioner of Income-Tax with a copy to the grievance cell and the concerned income tax officer and enclose copies of all the letters written to the assessing officer and a copy of the return filed. If this still doesn’t help, you could contact the income tax ombudsman who has been appointed to facilitate this process.

Individuals also have the right to use the Right to Information (RTI) route to find out the reasons for delay of refunds.  If you don’t receive a response from the Income-Tax Office within 30 days of your submitting the letter, then you could file an RTI application in the name of the accounts officer of the income-tax department of the government of India, including the photocopy of acknowledgment and other such documents.

If no action is taken within 35-40 days of sending the RTI, then you could file a first appeal within the next 35-50 days. If you still don’t receive any response then you could approach RTI activists for help with the final appeal to the Central Information Commission. Meanwhile, remember to retain photocopies of all the letter and papers that have been used in your communication with the Income Tax department.

Meanwhile, remember that it is also your right to claim interest on the amount that is due to you as a refund .

Where the refund of any amount becomes due to the taxpayer under the provisions of the I-T Act, he shall be entitled to receive simple interest on the amount of refund due in the return calculated at half percent for every month (or part of the month) from the date of actual payment of tax till the time such refund is granted.

These calculations often involve mistakes and in the case of an error, would need to file a rectification application under Section 154 of the I-T Act. However, the rules are different for refunds dealing with advance tax money. If the amount of refund is less than 10% of tax, then you do not stand to get any interest on it.

(Republished With Amendments)

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