Income Tax Refund: Everything You Need to Know
The time is around. Your conversations with your accountant are at peak. You are tracking each and every penny you have spent in the last year. It’s the season of Income Tax Returns and Refunds. With tax season in full swing, it’s crucial to stay informed and prepared.
Are you expecting an income tax refund this year? Understanding how to claim your refund and the steps involved can save you time and ensure you get your money back without any hassle.
In this blog, we will walk you through the essential details of income tax refunds, the process of claiming them, and other technicalities to help you navigate this crucial aspect of your financial health.
What is an Income Tax Refund?
An income tax refund occurs when you have paid more tax to the government than your actual tax liability for a particular financial year. This excess amount can be claimed back easily as a refund.
Common scenarios that lead to a tax refund include overpayment of advance tax, TDS (Tax Deducted at Source), or self-assessment tax.
To put it simply, Taxes paid – Total tax liability= Income Tax Refund
Eligibility- Income Tax Refund
Income tax refund is available to any taxpayer who has paid more tax than necessary. This involves salaried persons, self-employed professionals, freelancers and even businesses. Actual tax liability for the financial year relative to the amount of tax paid determines whether a taxpayer is entitled to a refund or not.
Steps to Claim an Income Tax Refund
Claiming for an income tax refund is a simple process.
- File your ITR
First and foremost, you should have filed your Income Tax Return (ITR). Make sure you correctly fill in all details concerning your income, deductions and paid taxes. Choose the right ITR form based on source of income and status or position of the person concerned. For most salaried individuals, ITR-1 (Sahaj) is the suitable form. - Check Your ITR
After filing your ITR, you need to check it. Checking can be done using various electronic methods such as Aadhaar OTP, net banking or sending a signed physical copy of ITR-V to Centralised Processing Center (CPC), Bengaluru. - Refund Status Tracking
You can monitor the progress of your refund once your ITR has been processed and verified by logging into either e-filing portal of Income Tax Department (https://www.incometax.gov.in/iec/foportal/) or National Securities Depository Limited (NSDL) website (https://tin.tin.nsdl.com/oltas/refund-status-pan.html) online using your PAN and assessment year for latest update on its status. - Respond to Notices (If Any)
At times, a notice may be served by the Income Tax Department asking you to explain some aspects stated in your ITR. Be quick to respond so that these delays do not interrupt you when processing this note or else reply through the e-filing portal which is available online at any given time. - Refund Credited to Your Bank Account
If your refund claim is found to be accurate, the refund amount will be directly credited to the bank account mentioned in your ITR. Ensure that your bank account is pre-validated and linked to your PAN for smooth processing.
Time Duration to Receive Your Income Tax Refund
To get the tax refund, it takes up to 90 days after you have e-verified your return. The period depends on the Income Tax Department’s internal process. However, it usually lasts between 7 and 120 days in general. With a view to expediting processing of refunds, a new refund processing system has been introduced by the Income Tax Department which is expected to take only a few days rather than months.
As such, there has been a decrease in the average ITR processing duration to 10 days for AY 2023-24 returns that were filed.
Common Causes of Delay in Receiving Income Tax Refunds
At times, refunds may experience delays despite following the proper procedure. Here are a few typical factors that can cause these delays:
Errors in your ITR – Incorrect information or inconsistencies in your ITR filing can lead to delays.
Not verifying your ITR – Failing to verify your ITR can halt the refund process.
Pending Notices for ITR Department – Unresolved issues and queries from the Income Tax Department cause unwanted delays in the refund process.
Bank account problems – Inaccurate details or accounts that have not been verified may cause refunds to not go through successfully.
Conclusion
Requesting a refund on income taxes doesn’t need to be a stressful task. By comprehending the procedure and adhering to the steps provided, you can guarantee a refund that is both smooth and prompt. Make sure to maintain organised financial documents, submit your Income Tax Return correctly, and promptly address any correspondence from the Income Tax Department. By following these methods, you can effortlessly receive the refund you deserve and experience the financial comfort it provides.
