Home Income Tax Income Tax Refund & It’s Provisions As Per Income Tax Act

Income Tax Refund & It’s Provisions As Per Income Tax Act

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Income Tax Refund means when you have paid more taxes (either by way of TDS or TCS or Advance Tax or Self-Assessment Tax) than you’re supposed to. The tax is calculated after taking into consideration all the deductions and exemptions at the time of filing of Income Tax Return.You can claim this refund at the time of filing your income tax return (ITR). Currently, the last date of filing ITR is December 31, 2021.

Under the following cases a claim to refund may arise –

  • When tax is deducted at source from salary, interest on securities or debentures, dividend at a rate higher than the rate applicable to the total income of an assessee.
  • When tax paid in advance exceeds the amount of tax actually payable as determined at the time of regular assessment.
  • When tax calculated was higher due to some mistake and later on tax liability is reduced on account of rectification of a mistake.
  • When tax was calculated at the higher rate on the payment given to non-residents whereas they were actually chargeable at a lower rate of income tax.
  • When due to double taxation , the assessee is entitled to a double taxation relief.

There are certain special cases in which the refund is to be claimed by a person other than the payer. The provisions relating to person entitled to claim refund in certain special cases are given in section 238. As per section 238, following persons are entitled to claim refund of tax:

  • Where the income of one person is included in the total income of another person under any provision of the Act (i.e., as per the clubbing provisions, e.g., income of minor child clubbed with the income of parent), the latter shall be entitled to a refund in respect of the clubbed income.
  • Where through death, incapacity, insolvency, liquidation or other cause, a person is unable to claim or receive any refund due to him, his legal representative or the trustee or guardian or receiver (as the case may be), shall be entitled to claim or receive such refund for the benefit of such person or his estate.

For claiming your income tax refund or TDS refund all you need to do is give a written proof to the Department about your Income and deduction details, by way of filing your Income Tax Return. Just make sure that you provide the details of all your income and tax deducted/ collected/ paid during the relevant year to ensure the component of refund is reflected in your income tax return.

In case, you have refund due for the years preceding the aforesaid year and you forgot to file an income tax return for those years, then you can take respite of CBDT Circular No: 9/2015 to get a refund for previous six assessment years. This circular can be used only where your refunds are the result of the excessive deduction/collection of tax and/or excess deposit of advance /self-assessment tax. For taking benefit of the above circular, you need to make an application to the relevant authority depending upon the amount of claim.

No condonation application for claim of refund/loss shall be entertained beyond six years from the end of the assessment year for which such application/claim is made. Condonation application should be disposed of within six months from the end of the month in which the application is received by the competent authority, as far as possible. 

The details in this regard(as given in said Circular) are as follows:

Amount of claim (refund / loss) for any one assessment year

Application To:

10 Lakhs or less

Principal Commissioner of Income-tax/ Commissioner of Income-Tax

More than Rs.10 Lakhs but less than Rs. 50 Lakhs

Principal Chief Commissioners of Income-tax/Chief Commissioners of Income-tax

More than 50 Lakhs

Central Board of Direct Taxes (CBDT)

What is the meaning of the different “Refund Status” ?

Status

Meaning

No e-filing has been done You have either not filed your return or filed it manually.
To be eligible for a refund, you are required to file your return online as the returns filed offline are not qualified for a refund from F.Y. 2014-15.
Refund is already credited to your bank, please contact your bank. Refund has been processed and credited to your Bank Account
If your refund has not been credited, then contact:
CMP, State Bank of India
Address: Survey No.21 Opposite : Hyderabad Central University, Main Gate, Gachibowli, Hyderabad -500019
Email: itro@sbi.co.in
Toll free Number: 1800 425 9760
Refund cheque has already been encashed. Your income tax refund process is complete & it has been credited to your Bank Account and the same has been encashed.
If your refund has not been credited, then contact:
CMP, State Bank of India
Address: Survey No.21 Opposite : Hyderabad Central University, Main Gate, Gachibowli, Hyderabad -500019
Email: itro@sbi.co.in
Toll free Number: 1800 425 9760
Refund Not Determined As per the Income Tax department, no refund is determined after processing of your ITR
Unable to credit refund as the account number provided by you is incorrect. This means that the account number provided by you was incorrect. You are requested to apply for refund reissue by providing the correct account number to claim your refund.
Defective return u/s 139(9) It may be that your return has been treated as the defective Return. For exact reason, you can check this on your income tax website user account.
ITR Processed but need to submit rectification request This may occur due to a mismatch in the calculation of the department & ITR filed. For this you may receive an intimation from the department to submit a rectification-request
Return submitted. Processing rights transferred to Jurisdictional Assessing Officer. This implies that your return will be processed by your Jurisdictional Assessing Officer (AO). Please contact AO for further details. Click here to know your AO.
Return Submitted and not verified This implies that your return has been submitted successfully but it has not been e-verified either through post or online mode. Further, until and unless you verify your return, it would not be processed by the income tax department. So, please verify within 120 days from the date of filing.
Return Processed with No Demand and No Refund It implies that your return has been processed successfully without any additional tax payable or refund due. Further, you can check the details from the intimation received u/s 143(1) on your mail id.
Return Processed and Tax Demand Determined This implies that your Income has been assessed by the Income tax department from your filed ITR and tax payable amount has been determined upon it.
You can check the details from the intimation received u/s 143(1) on your mail id.
In that case you need to submit the response through the E-Filing website under “efile tab” -> “Response to outstanding tax demand”.
Return Processed. Refund determined and Sent to Refund Banker. This implies that your refund claim has been forwarded to the refund banker for processing.
So, wait for some more days and the refund amount will be credited in the bank account mentioned by you at the time of filing the return.
Return Processed and Refund returned Unpaid This implies that the income tax department has sent a refund to you but either your address is wrong or bank details provided are incorrect, due to which refund was not credited/paid.
In that case you need to place a refund reissue request stating the failure reason under “My Account” -> Service -> “Refund reissue request”.
e-Return for this PAN and Acknowledgement Number has been digitally Signed This implies that your return has been filed successfully and it is digitally signed.
Return Submitted and Under Processing This implies that your Income-tax Return is still not processed.It is under process. Further, no need to worry if you have e-verified or sent your signed ITR V by post as it will definitely be processed by the department sooner or later and then you will receive a refund. It would be credited along with interest
Return Processed and Refund Paid Congratulations! This implies that your return as well as refund has been processed successfully and the refund has been credited in your bank account. Now, no further action is needed from your side for this year.
Return Submitted and Verified This implies that your return has been submitted and successfully verified. It will now be processed by the Income Tax Department. So, you have to wait for some more days
Invalid Return This implies that your return has been treated as an invalid return by the Income Tax Department. You need to file your return again in this case.
Return Processed and Rectification Rights Transferred To Assessing Office This implies that your return has been processed. However, for rectification, you need to contact your Assessing Officer as the rectification rights have been transferred by CPC. So, instead of the online route, you have to submit your rectification request to your local AO directly.
Return Processed. Refund Adjusted Against Demand If any previous amount outstanding by the department, then the department will adjust the amount you owed in the current year’s refund. But before adjusting that amount they will send you a notice u/s 245, stating that they are adjusting your refund with the previous years’ outstanding amount. You have to submit your response to it that whether you agree with department or not. If the response is not submitted timely then department adjust the demand and processed the return after adjusting the demand.

 

Interest on income tax refund

Many times the taxpayer does not get the refund in due time, in such a case he is granted interest on delayed refund. An individual will also receive the interest on the income tax refund if the ITR is filed irrespective of the deadline. The period for the calculation of interest on refund is based on mode of tax payment:

a) Where refund is of excess payment of advance tax or TDS or TCS:
(i) if return is filed on or before due date, Interest in such a case shall be allowed at the rate of one-half percent for every month or part of a month from April 1 of relevant assessment year to the date of refund being granted OR,
(ii) where return is filed after the expiry of deadline, Interest in such a case shall be allowed at the rate of one-half percent for every month or part of a month from the date of furnishing ITR or to the date on which the refund is granted.

b) Where refund is of excess self-assessment tax paid: period shall be from the date of furnishing of return or payment of self-assessment tax, whichever is later, to the date on which refund is granted.

c)In any other case (i.e., a case in which refund is due to reasons other than those stated above), interest shall be calculated at the rate of one-half percent for every month or part of a month. Interest in such a case shall be allowed for a period commencing from the date/dates (as the case may be) of payment of the tax or penalty to the date on which the refund is granted. The expression “date of payment of tax or penalty” means the date on and from which the amount of tax or penalty specified in the notice of demand issued under section 156 is paid in excess of such demand.

However, no interest is payable in case of points (a) and (b) if the amount of refund is less than 10 percent of the tax liability. Also, if the payment of refund is delayed due to any action of the deductor then such period shall be excluded from the total period for which interest payable is calculated.

Variation in the amount of refund

Where, as a result of an order under section 143(3) or section 144 or section 147 or section 154 or section 155 or section 250 or section 254 or section 260 or section 262 or section 263 or section 264 or an order of the Settlement Commission under section 245D(4), the amount on which interest was payable has been increased or reduced (as the case may be), then the interest shall be increased or reduced accordingly. In a case where the interest is reduced, the Assessing Officer shall serve on the taxpayer a notice of demand in the prescribed form specifying the amount of the excess interest paid and requiring him to repay such amount.

Refund claim arises from Court Orders: 

In a case where refund claim has arisen consequent to a Court order, the period for which any such proceedings were pending before any Court of Law shall be ignored while calculating the said period of six years, provided such condonation application is filed within six months from the end of the month in which the Court order was issued or the end of financial year whichever is later.

 

Refund on appeal:

As per section 240, in a case where the refund becomes due as a result of any order passed in appeal or other proceeding under the Act, the Assessing Officer shall, except as otherwise provided in the Act, refund the amount to the taxpayer without his having to make any claim in that behalf. However, where –an assessment is set aside or cancelled and an order of fresh assessment is directed to be made, the refund, if any, shall become due only on the making of such fresh assessment. an assessment is annulled, the refund shall become due only of the amount of the tax paid in excess of the tax chargeable on the total income returned by the taxpayer.

 

Power of tax authorities to set-off the refund

 

At times, it may happen that, refund may be due to the taxpayer for some assessment year(s) and there may be some tax demand remaining payable by the taxpayer. In such a case, section 245 empowers the tax authorities to set-off the refund due to the taxpayer against the amount due from him.As per section 245, where a refund is found to be due to any person, the tax authorities authorised in this regard, may, in lieu of payment of the refund to the taxpayer, set off the amount to be refunded or any part of that amount against the sum, if any, remaining payable by the person to whom therefund is due. However, such an action can be done only after giving anintimation in writing to such person of the action proposed to be taken.

 
 
 
 

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