INTRODUCTION: An Assessee is entitled to Income tax refund if he has paid more taxes by the way of Tax deducted at source or tax collected at source or self assessment tax or Advance tax as per the provisions of Section-237 of Income tax act, 1961. Income tax refund can only be claimed after filing of Income tax return within the time limit prescribed under Section- 139 of Income tax Act, 1961. The Assessee needs to e-verify his return within 120 days of filing his return and also pre-validate the bank account to claim Income tax refund. The department will process the return and send intimation U/s 143(1) which will either show a consistency between your calculations and Income tax department calculations of tax liability and no further tax is payable or in case of mismatch of calculations additional tax is payable and refund claim is rejected partially or fully or Refund is accepted by the Income tax department.

Tax refund


  • DIRECT TRANSFER: The refund amount can be credited to the bank account of the taxpayer. The taxpayer is required to furnish the bank details while filing of Income Tax Return.
  • THROUGH CHEQUE: The refund amount can be paid to the taxpayer through a cheque. This cheque would be sent to the mailing address of the taxpayer.

NOTE: Income tax department will issue ONLY E-REFUNDS from 01.03.2019 i.e. they will only be issued to bank accounts which are linked to PAN.


Either the status of Income tax refund can be checked by logging on income tax website and clicking on acknowledgement number which will show the timeline of filing return, assessment year, date of verification of return, date of processing of return and date of issue of refund or reason of failure of such refund. The alternative of checking Income tax refund is checking the status on NSDL website. The refund status is available on NSDL 10 days after the refund has been sent by the department to the bank.

  • REFUND ADJUSTED AGAINST DEMAND: The department is authorized u/s Section 245 of Income Tax Act 1961, to adjust the refund or part of it towards any outstanding liability pertaining to previous assessment years. Before adjusting the amount the department shall send a notice mentioning that they are adjusting the current year refund with any previous year outstanding amount. A taxpayer is required to recalculate the tax liability if any pending of the previous financial years. A response is to be submitted by the taxpayer as to why such adjustment shall not be made by the department.
  • REFUND EXPIRED: Refund cheque which is not presented for payment within a stipulated period of 90 days is marked as expired and cancelled. This requires the Assessee to raise a refund re-issue request by login into E-filing portal with user ID and password.
  • REFUND RETURNED: If the income tax refund is sent to you via ECS (electronic clearing service), the payment transfer will not happen if you have given the wrong bank account details. A cheque or demand draft can get returned because you have given the wrong address.
  • REFUND UNPAID/FAILED: The refund status might show as refund been paid as although it may not be credited to bank account of the taxpayer because of the following reasons:

a) Wrong Bank details like MICR/IFSC code, Invalid Account number, wrong or mismatched account holder name, etc.

b) The communication address provided by the taxpayer is incorrect.

c) The refund cannot be received in case of TDS by the Assessee if details like BSR code, date of payment or the Challan numbers are incorrect.

d) If there is a mismatch in tax details mentioned in Form 26 AS and details filled by taxpayer while filing ITR. In case of refund failure taxpayer needs to raise a refund reissue request and provide accurate details or update the details.

  • REFUND NOT DETERMINED: This status indicates that the refund has not been processed yet by the Income tax department. The taxpayer will have to keep himself updated with the refund status.
  • REFUND PAID/ENCASHED: This means that the Income tax department has paid the refund depending upon the option exercised by the Assessee while filing his ITR i.e. direct credit to account or via cheque.


In case of above mentioned errors by the taxpayer he needs to submit a refund reissue request by taking the following steps:

1. Logging on Income tax website

2. Clicking on “My account” tab and select the service request option.

3. Selecting service type as ‘Refund Re-issue’

4. A pop up will show up giving the details such as PAN, Assessment year , Acknowledgement number, communication reference number and response.

5. After that the taxpayer is required to submit the response.

6. Bank and address details need to be furnished accurately

7. Verification process has to be done through EVC or DSC.

The taxpayer will have to make sure that he has pre-validated his bank account in which he wish to receive the income tax refund once Income tax return is filed successfully or when he is filing  ITR. Apart from pre-validating bank account, taxpayer is also required to link PAN with bank account.

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January 2021