Income Tax refund – how to ensure a timely receipt

Income Tax refunds – only few of us get on time, while most of us wait for a long time. There could be several reasons for delay in getting your tax refunds: mismatch in the tax paid details, error in bank account details, technical problems at the department, growing number of tax payers, change in mailing address etc.

In our today’s article we shall look into some basic things about tax refunds, the process of tax refund and how you can ensure timely receipt of tax refunds:

When are you eligible for tax refunds?

Normally, employees declare their investments or the details of tax saving investments to their employers at the beginning of each Financial Year (FY). The employer deducts the tax based on the declaration provided by the employees. Failure to declare the investments leads to higher deduction of tax, which in turn results into tax refunds.

Other reasons could be excess deposit of advance tax on other income, change in the housing loan interest repayment, and claiming of deduction for donations at the time of filing the tax returns.

How the refund process works

Once the Income tax return is filed, the income tax department verifies the information and processes the income tax return. If any excess tax is paid, the same is refunded to the tax payer. Ideally, the refund cheque is send via postal mail to your mailing address or the refund amount is credited to your bank account through the electronic clearing system (ECS).

Reasons for the delay in refund

Mismatch between return filed and form 26AS: Mostly the income tax refund is delayed because the amount you claim as taxes paid does not match with the Government’s online record (Form 26AS).

Incorrect bank account details: to avoid any fraud, the details of bank are printed on the refund cheque. And in case of change in operative bank account, the refund is bound to be invalid.

Treaty claim in the tax return: In case of international expatriate employees working in more than 1 country and claiming benefit of DTAA, Centralised Processing Centre (CPC) may re-direct the returns to the respective ward to verify the claim and process the tax refunds. The additional procedure results in delay in issuing refunds.

Non submission of ITR-V within the prescribed timelines: The acknowledgement of filing Income Tax Return known as ITR-V generated while filing of the tax return is to be signed and send to the CPC for successfully completing the filing procedure. The tax return is considered not filed until the ITR-V reaches the CPC.

Mentioning Incorrect Permanent Account Number (PAN) and other personal details (name, assessment year etc)

How can you track your refund?

The ‘Refund Banker Scheme’ introduced in 2007 is now operational all over India and covers returns processed at CPC. As per this scheme, the refunds will be transmitted to the State Bank of India, Mumbai branch for further processing.

Status of refunds, being paid other than through ‘Refund Banker,’ can also be viewed at www.tin-nsdl.com by entering the ‘PAN’ and ‘Assessment Year’.

An individual can track the refund status as given below:
-Visit tin.tin.nsdl.com/oltas/refundstatuslogin.html -Enter PAN -Select Assessment Year -Click Submit

Individual taxpayers can also send emails to itro@sbi.co.in or refunds@incometaxindia.gov.in for any refund related queries.

How to deal with delays in tax refund

If you do not receive your tax refund within a reasonable time frame (normally one year from the date of filing the tax return), you can visit the tax department for a follow up of the refund or you can write a letter to the concerned tax officer. However, if no action is taken by the concerned tax officer, the tax payer can move up the hierarchy and write to the jurisdictional Commissioner.

Important points for a faster refund

• Verify the tax paid details as per Form 16/ 16A with the Government’s online record (Form 26AS). In case of any discrepancy, contact your employer or the concerned person for the rectification. The Part A of recently notified Form 16 will have the tax paid details as per Form 26AS.

• Retain all the supporting documents for the investments, deductions and expenditures. This will help hassle-free verification by the tax department and faster processing of tax refunds

• Provide valid postal address where refund cheque can reach easily.

• Submit ITR-V within the prescribed timelines.

• Ensure that accurate bank account details are mentioned in the tax return, like bank account number, MICR code, ECS facility etc.

Ensuring correct details in the tax return, like PAN, name, assessment year etc.

If you take the above precautions, you are very likely to receive your tax refund quickly and without much hassle.

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XPERT CONSULTING – Tax Consultants

E: contact@xpertconsulting.biz