Online Income Tax Refund

Income Tax Refund is initiated when you pay a higher tax amount to the IT Department than your actual tax liability. In layman’s terms, this happens when the self-assessed tax paid/advance tax/TDS deducted is more than the total tax you have to pay to the government. The considerations for the same are as per the conditions under the Sections 237 to 245 of Income Tax (IT) Act, 1961. The refund you claim will show in the ITR you file. You can claim IT Refund easily online, and we will discuss its procedure in detail in the post below.

Apart from the process to claim Income Tax Refund, we will also discuss about things to expect after processing of the ITR, role of SBI in payment of IT Refund, interest paid to you on the refund claim amount and relevant things to consider, conditions under which interest is not paid, interest you have to pay back on excess refund, interest not paid due to incorrect details, and frequently asked questions.

How to Claim Income Tax Refund?

After filing ITR for a particular Financial Year, you can claim refund for excess tax deducted or paid in that FY. According to the Income Tax Act, 1961, you need to file ITR online by July 31 every year until the deadline is extended by the IT Department. The Financial Year succeeding a FY is known as relevant AY (Assessment Year) for that Financial Year.

NOTE: Make sure to pre-validate the bank account where you wish to get the refund amount. The Income Tax Department will provide e-refunds to only the bank accounts that are linked to PAN, and pre-validated on its official web portal.

  • You can file the tax return providing information in the online forms such as ITR- 1 or ITR-4 or uploading a filled java utility/excel form.
  • From 2019, the official portal of IT Department has started to provide pre-filled ITRs to existing members.
  • The ITR Form contains details about your interest income (if TDS is deducted), salary income, and other information.
  • You can download the XML file in order to pre-fill the ITR if using filing the returns with the Excel utility option.
  • After filling up the ITR Form, click the validation button on the sheet for ‘Taxes Paid and Verification’. The system then calculates the due refund as per the details you enter. The amount for refund will display in the ‘Refund’ row.
  • The displayed refund amount is the one claimed by you. The IT Department may not necessarily accept this amount, as the Department will itself also calculate the refund amount when processing the return.
  • The IT Department will verify the genuineness of the refund amount claimed when processing the Income Tax Return.

What Happens After the I-T Department Processes the ITR?

After the I-T Department processes the IT Return, you will receive an intimation about the same as per the outcome of the verification. If you have e-filed returns, then you will receive the intimation on your registered email address. A similar intimation is also sent on your registered mobile number.

If the department requires additional details, then your case will be scrutinized. After this a notice under applicable section will be sent to you.

The intimation as per the Section 143(1) is sent to you and may show the following results:

  • You do not have to pay any further tax if the tax calculation matches with that of the IT Department.
  • Your tax calculation may match with that of the department. If there is any refund due to you, the authority will accept the raised claim.
  • If the claim amount is accepted, the intimation sent will contain the refund amount details as well. You will receive a refund reference number.
  • You can check the status of IT refund online from the e-filing website. Then from the ‘My Account’ tab, proceed to Refund/Demand Status. You will have to provide PAN details and Assessment Year details to known the refund status.
  • In case there is a mismatch in the tax calculation, then the Department will ask for additional tax, known as tax demand. You have to pay this amount or your refund claim will be either reduced or rejected.

Role of SBI in Payment of IT Refunds

The Income Tax Department has authorized State Bank of India (SBI) for payments of IT refunds. This can be initiated through direct credit in your account or cheque. You need to provide accurate bank details in the ITR Form to receive the online IT refund payment by the Department. The ITR form has a row to enter the details of bank account where you wish to get the refund. If the refund claim is accepted, then the due amount will be credited directly to your provided bank account in time.

Interest Paid to You on the Income Tax Refund Amount

Under Section 244A, if a refund is due to you, then the I-T Department will pay an interest on this amount with subject to certain terms and conditions, such as:

  • If you file for IT return on or before the due date of the AY specific to the Financial Year for which you have filed the returns.
  • If the refund is for the excess payment from TDS or advance tax and the return is filed before or on the due date. The time period for the same is from 1 April of the particular AY to the date of refund granted by the authority.
  • Or, it may also be true if the Return is not filed before or on the due date. But the time period will be that of the date of furnishing the return to the date of granted refund.
  • The interest can be paid if the refund is for the excess self-assessed tax paid. The time period of the same would be from the date of furnishing the tax or return, whichever is later to when the refund was granted.

Things to Remember About Interest Applicable on IT Refund

Here are the things to consider:

  • Do note that interest amount you get is totally taxable.
  • During the ITR filing, you have to include the interest paid on the refund in the gross total income for that FY, in which the interest was received.
  • The interest calculation follows the simple interest method calculation on the due refund amount at 0.5% for a month or part of month. Otherwise it is calculated at 6% per annum.

When is No Interest Paid on the IT Refund Amount?

But there is no interest payable if the refund amount is lower than 10% of your tax liability. If the refund payment is delayed from the deductor, then the time period considered will be excluded from the total period on which the payable interest is calculated.

Interest You Have to Pay on Excess Refund from the I-T Department

As per the norms of Section 234D of the Act, if you receive a refund amount higher than what you are eligible for, then the Department will recover the excess amount as well as the excess interest it pays.

  • The Department will perform a regular assessment after the initial assessment. The latter is performed when the Return is processed initially.
  • On the other hand, regular assessment is scrutiny of the ITR you file.
  • The interest applicable on the excess refund is same as the interest applicable on the refund paid.
  • The time period of interest is calculated from the date of grant of refund to the date of regular assessment. It is calculated as per the simple interest method.

Income Tax Refund Pending Due to Incorrect Information

After filing and verifying ITR, keep a regular check on the status of income tax refund online. If you filed ITR with a claim for refund, but not received the same, then it could be due to following reasons:

  • After initial assessment of verified ITR, the Department funds that no refund is payable. The same will show under the Section 143(1) of the Income Tax Act. This notice will be sent when the return is processed.
  • If the notice says no refund, then that means the refund claim was not accepted. It means the refund calculations your end did not match with that of the IT Department.
  • The authority has processed the refund. However, you do not receive the cheque due to wrong address details or incorrect bank details.
  • You can request for re-issuance of refund to the authority in case you do not receive refund because of incorrect details. You can raise request for it from the ‘My Account’ tab from ‘Service Request’ section.

Frequently Asked Questions About Online Income Tax Refund

Here are the FAQs on Income Tax Refund Online:

There are certain cases when one is eligible and can go for IT refund. A few of these are stated below:

  • If the tax paid in advance on the ground of self-assessment is higher than the tax to be paid based on regular assessment.
  • If TDS from salary, dividends, interest on debentures/deposits/, etc is higher than the payable amount based on a regular amount.
  • Sometimes, there is an occurrence of error in assessment process resulting in higher tax calculation. So, when it resolves, tax charged must reduce and one can claim refund.
  • If same income is taxed in India as well as foreign country, with which the Indian government has signed agreement to avoid double taxation.
  • If tax has been paid without considering the investments that offer tax benefits.

You can avail refund by filing the return of Income Tax online. Generally, the date of filing IT return is 31st July unless it is extended.

To know the amount of tax you will get refunded, calculation of tax payable associated with the payer needs to be calculated first. If you have paid a higher amount than what it should have been submitted, then the difference amount will be refunded by the department.

The payment is directly transferred to the pre-validated bank account of the claimant or sent in the form of cheque.

You can check the status for IT fund online on the NSDL website or the portal for e-filing of income tax. If you are doing the same on the e-filing portal, then login to your account. Click ‘View Returns/Forms’. Against ‘Select an Option’, click ‘Income Tax Returns’, and pick the relevant Assessment Year. Then click ‘Submit’. Click the Acknowledgement Number and view the status of the income tax refund online.