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Income Tax Refund

Income Tax refund

In layman terms, tax refund is the disparity between the taxes paid and taxes owed to you. A tax refund is furnished to the taxpayer when the tax liability is less than the taxes paid. As per the Income Tax and other Direct Tax laws, a refund occurs when taxes paid are higher than your actual tax liability, including interest. It could be in the form of advance tax,tax deducted at source, self-assessment tax, foreign tax credit etc. Tax refunds are usually paid after the end of the tax year.The same is noted under Sections 237 to 245 of the Income Tax Act, 1961.

Eligibility for Income Tax Refund

Let us check what would make you eligible for an income tax refund in India

  • If the tax you paid in advance as per self-assessment, is greater than the tax that you are supposed to pay as per the regular assessment,
  • Based on regular assessment, your tax deducted at source (TDS)from interest on securities or debentures, dividends, salary etc. is more than the tax to be paid.
  • In case the same income is taxed in a foreign country (with which the government of India has an agreement to avoid double-taxation) and in India as well.
  • If the tax charged on the basis of regular assessments is reduced due to an error in the assessment process which was resolved.
  • If you find that that the tax payable is in the negative, after considering the taxes you’ve paid and the deductions you are allowed.
  • If you have invested in offers for tax benefits and deductions, which you are yet to declare.

Steps to get Income Tax Refund in India

You are eligible to avail income tax refund only after you have filed the returns of your income. Generally, the last date for filing income tax returns is July 31 of every year unless it is extended.

  1. Income Tax amount that gets refunded

You have to first calculate the tax liability associated with you, then you can determine the amount of income tax that will get refunded. If the amount that you have paid in the form of taxes is more than the tax liability, then the extra amount will be refunded to your account.

  1. Payment of tax refund

Generating a tax refund is a simple and smooth process. The payment is either done through cheque or directly credited to the bank account which is registered with the Income Tax Department.

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  1. Claiming Income Tax Refund

The fastest and smartest method of filing your income tax refund is to declare your investments in Form 16. The investments included can be investments in equity/NSC/mutual funds, life insurance premiums paid, bank FD’s, house rent being paid, tuition fees, etc. Submit all relevant proofs when you are filing your IT return. If you have been paying extra taxes that you think you could have avoided, you will need to fill out Form 30, which is basically a request that your case be looked into and analysed, so that any excess tax you have paid is refunded. Your refund claim should be submitted before the end of the financial year, along with a return in the form as prescribed under Section 139 of the Income Tax Act, 1961.


  1. Tracking Income Tax Refund

You can track the status of your refund, from the IT Department. You will also be notified, if your refund process is yet to be completed by your Officer-in-Charge.

  1. Refund by cheque

The Government of India offers taxpayers the convenience of tracking the cheque by contacting the speed post service that has been tasked with delivering it. You simply have to use the reference number that the IT department will give you.

  1. Refund through Direct Transfer

A taxpayer can track his/her income tax refund via NSDL-TIN website. Any excess tax paid can be refunded through online process which can be credited to your registered bank account through ECS transfer.

Beware of scam emails. Exercise sufficient caution, as you can receive plenty of scam emails regarding income tax refund, requesting to share your bank account details for processing the refund.


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