How to claim Income Tax Refund?

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Eligibility to claim Income Tax refund:

An assesse is eligible to receive the income tax refund if under any circumstance he has paid more tax to the Government than his actual total tax liability. Such circumstances may include excess payment of advance tax, self-assessment tax or TDS.

Process to claim the refund:

  • Income Tax refund for the tax paid or deducted during a financial year can be claimed by the taxpayer while filing the income tax return for that year.
  •  It is not necessary the refund amount claimed by the taxpayer is accepted by the Income Tax department. The IT Department will process the income tax return, verify the genuineness of the claim made, and then as per the outcome of the processing, will send an intimation via an e-mail or an SMS on the registered mobile number of the assessee about the refund amount.
  • Once the assessee files his ITR the ITR is processed by the Income Tax and the genuineness of the claim made is verified. 
  • A ‘Refund Reference Number’ is provided by the IT department that can be used to track the status of refund amount anywhere and anytime by logging in at the income tax e-filing website.
  • However, to check the status of refund, the assessee would be required to enter the information regarding his Permanent Account Number and the relevant assessement year.
  • The refund amount will be credited by the IT department directly to the bank account of the assessee.
  • In case, refund is due to a taxpayer, then according to the provisions of section 244A of the Income Tax Act, interest on the refund amount would be payable to the assessee if the return for the relevant financial year is filed by the assessee on or before the due date.

 Procedure to calculate interest on refund:

  • When advance tax or TDS is paid in excess:

If the return is filed on or before the due date, then the interest will be calculated from 1st April tothe date of grant of refund, and if the return is filed after the due date, the period shall be from the date of furnishing of return to the date of grant of refund. 

  • When self-assessment tax paid in excess:

Interest will be calculated from the date when the return is furnished or tax is actually paid, whichever is later to the date on which refund is granted. 

  • If the amount of refund is less than 10% of the total tax liability, no interest will be paid.
  • The total amount of interest on income tax refund is taxable and must be included in the gross total income while filing return for the financial year in which the assessee has received the interest amount. 
  • Interest is calculated on the amount of refund as per the simple interest method at the rate of 0.5% per month or 6% per annum.


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An MBA in finance, I like to cover the wide range of topics related to Taxation, SEBI, Finance and anything that is Public Helpful. The motive is always to make it simpler for the taxpayers understand the system better and take informed decisions.

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