What is Income Tax Refund?

An income tax refund refers to the amount of money that a taxpayer receives from the government when they have paid more income tax during a particular financial year than what they owe. It represents a return of excess tax paid by the taxpayer to the tax authorities. When individuals or businesses pay their income tax through tax deductions at source (TDS), advance tax payments, or self-assessment tax, they may end up paying more tax than their actual tax liability. This can occur if they have claimed excessive deductions or if their tax liability is reduced due to exemptions, deductions, or tax credits at the time of filing ITR.

In such cases, when the taxpayer files their income tax return and the tax authorities assess their tax liability, they calculate the actual tax liability based on the income and deductions declared. If the assessed tax liability is lower than the tax paid, the excess tax amount is refunded to the taxpayer. Remember, you have to finish e-filing to get your ITR Refund.

For example, if a taxpayer has paid Rs. 15,000 in taxes for the financial year 2023-2024, but their actual tax liability is only Rs. 10,000, they are entitled to a refund of Rs. 5,000 from the Income Tax Department. After filing and verifying the income tax return, the department will begin processing the return. Typically, it takes about four to five weeks for the refund to be credited to the taxpayer's bank account once the return is processed.

How to claim an Income Tax Refund?

To claim an income tax refund, you need to file your income tax return (ITR) and disclose all the income and taxes paid information with the Income tax department. Once the ITR is processed by the Income Tax Department, and if there is any excess tax paid, the refund will be issued to you.

Once the refund is generated, it will be either directly credited to your bank account You can know the income tax refund status online through the Income Tax Department's website NSDL or through the FileYourTax Income Tax Refund status tool.

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How to Check Income Tax Refund Status?

How can you Check Income Tax Refund Status through an E-Filing Website?

To check the status of the refund, there is no separate tab for it in the new portal, just click on e- file tab and then click on the “ View Filed returns” tab and by clicking on view details, you can check the status of the current return filed as well as the previous returns filed.

How can you Check Income Tax Refund Status through TIN NSDL Website?

Visit https://tin.tin.nsdl.com/oltas/refund-status-pan.html and enter your PAN and select the assessment year you want to check tax refund status for.

Select the assessment year for which you want to check the refund status

How to Check the Income Tax Refund Status through FileYourTax?

Enter your PAN, email address, and select the relevant assessment year

Enter the acknowledgment number if you also want to know the receipt / e -verification status of your ITR

What is the meaning of the status of my refund?

First, verify your Income Tax Return, then track the status of your income tax refund with the department. In case, you have still not received your refund then one of the reasons for the ITR refund delay could be due to a problem in your bank account or address details. In such a situation, you can make a “refund reissue” request to the Income Tax Department but only after receiving an "Intimation"

Simple steps to apply for Refund Reissue:

Step 1: Go to https://www.incometax.gov.in/iec/foportal/

Step 2: Log in with your User ID and password.

Step 3: After logging in, you will see a dashboard

Step 4: Click on the services tab and refund reissue

Step 5: When you click on refund reissue, you will see a window with a tab refund reissue.

Step 6:Once you select the “Refund Reissue” tab visible on your screen, you will be redirected to the refund reissue page where you need to create a refund reissue request.

Step 7:Select the bank account in which you want your refund and click Proceed to move to the verification stage.

Step 8:For successful submission of a Refund Reissue request, users must have EVC. (Users must authenticate the refund reissue request through Aadhaar OTP & EVC code)..

Step 9:Click on the submit Button

Once all these steps are done successfully, you can then check the TDS refund status on the dashboard.

What are the reasons for the Income Tax Refund delay?

1. There can be several reasons for a delay in receiving an ITR refund. Here are some common factors that can cause delays:

2. Incorrect or Incomplete Information: If there are errors or discrepancies in your tax return, such as incorrect bank account details, missing information, or mismatched income statements, it can lead to delays in processing your refund.

3. Manual Processing: In some cases, when tax returns require manual review or verification by tax officials, it can result in delays. This usually happens when there are complex tax situations, high-value refunds, or random selection for scrutiny.

4. Tax Return Errors: Any mistakes made while filling out your tax return, such as calculation errors, incorrect deductions or credits claimed, or missing attachments, can lead to processing delays.

5. Taxpayer Identity Verification: Tax authorities may sometimes conduct additional verification procedures to ensure the identity of the taxpayer, especially in cases of suspected identity theft or fraud. These additional checks can cause delays in issuing the refund.

6. Outstanding Tax Dues: If you have any outstanding tax dues or liabilities from previous years, the tax authorities may offset your refund against those dues, leading to a delay or partial refund.

7. High Volume of Filings: During peak tax filing periods, when there is a high volume of tax returns being processed, the tax authorities may experience delays due to the sheer number of returns they need to handle.

8. Change in Tax Laws or Procedures: If there have been recent changes in tax laws or procedures, tax authorities may need additional time to adapt their systems and processes, resulting in delayed refunds.

Will I also get any interest for the delayed refund?

Yes, the Income Tax department takes the responsibility of granting a simple interest @ 0.5 percent per month to compensate for the delayed refunds .In the case of refund arising out of TDS / TCS / Advance Tax - Interest is calculated @0.5% for every month or part of a month for a period starting on 1st April of the relevant AY till the date of grant of refund, in case the return is filed on time i.e., on or before the due date. However, if the return is not filed within the due date the period of interest shall be from the date of filing the return to the date of grant of refund. In this case, if the refund is less than 10% of the tax determined under assessment or in intimation u/s 143(1), then you are not entitled to any interest.

What are the different ways in which refund is issued by the Department?

The Refunds are sent by the Income Tax Department in two ways-

RTGS/NECS: This is the fastest facility provided by the department to get refunds. Under this facility your refund is directly credited in your bank account.

The Income Tax Department has altered the process of claiming the ITR refund a bit. It has been made compulsory by the IT Department to pre-validate your bank account in which you wish to receive the income tax refund. Pre Validating a bank account alone is not enough, the individual also needs to link the PAN with the bank account. This has come into force from March 1, 2019. The last date for linking Aadhaar and PAN is 30th June 2023.

If your ITR has already been verified, then the reason for not receiving your TDS refund can be:

Your ITR status is still under processing.

You have received a notice/ communication from the IT department regarding your filed ITR. For e.g., Defective notice u/s 139(9) or notice for proposed adjustments u/s 143(1)(a).

Your ITR has been processed but the Income Tax Department determined: No Refund Due.

The Return has been processed after determining the refund, but the refund could not be credited due to reasons like an incorrect bank account number, incorrect postal address etc.

Your ITR has been processed after adjusting it with outstanding demand (if any).