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.
Let us check what would make you eligible for an 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.
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.
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.
Apply now for Instant Loan
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.
Additional Reading : 8 POSSIBLE RISKS OF UNSECURED PERSONAL LOANS
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.
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.
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.