All those who file an income tax return will know its end-to-end process, but when it comes to claiming the refund, many of us don’t know how to initiate it. In this article, let’s get to know the step-by-step process to receive a tax refund.
Everyone needs to fill the Income Tax Return (ITR) form, which assesses information of income and tax applicable to the tax department. As per the Income Tax Act, it is mandatory for any person whose annual income earnings exceed Rs. 2.5 lakh in a financial year, to file an ITR. Often while filing ITR annually, many individuals pay higher taxes than the liable tax amount. In such cases, they can ask for an income tax refund.
High tax payment could be due to tax deducted at sources, advance tax, self-assessment tax, foreign tax credit, etc. The income tax department returns the excess amount, and a taxpayer can claim it under Section 237 of the Income Tax Act, 1961.
Below are some situations in which case you can claim an Income Tax Refund:
- Excess interest income deduction on your investments can result in high TDS or Tax Deducted at Source.
- The amount of taxes deducted by your employer is higher than your actual tax liability in a particular year.
- Excess tax paid due to Double Taxation Avoidance Agreement that India has with some of the select countries around the world. You can claim for a tax refund if you are an NRI residing in a foreign country with which India has a DTAA. For instance, if you have an NRO account with an Indian bank, you can claim a tax refund for Tax Deducted at Source on interest derived from the account. Note that interest earned on NRO account is taxable as per the income tax slab rate.
Process of Income Tax Refund
There is no specific process to claim for an income tax refund, below are some of the steps you can follow:
- You need to verify ITR either digitally or by posting it to Centralised Processing Centre within 120 days of filing the ITR.
- The Income Tax Department will again verify the tax refund, and it will approve your refund request only if the calculations are valid.
- Once your request is approved, the IT Department will send an email stating you’re eligible for the Income Tax refund and the amount will be directly credited to your account.
Meanwhile, you can check for the status of your refund on e-filing portal. Follow the below steps:
- Visit e-filing portal of Income Tax Department
- Log in with your credentials
- Select “view returns/ forms” option
- Select “My Account” tab and then Income tax returns option that appears below your PAN card detail
- Click on the acknowledgement number
- You can view your Return details along with income tax refund status
Calculation of tax can be tough at times. There are bound to be errors if you’re doing it manually. To avoid such issues, you can use an income tax calculator that generates accurate taxable amount.