How to Ensure timely receipt of Tax Refunds?
Rules and Guideline of getting tax refunds on time in India is not fast and stringent, it takes considerable time to get tax refund. But every time the delay is not caused due to department fault, an assessee providing wrong details could also be the reason of delay in tax refunds. There are several other reasons for delay in tax refunds: mismatch in the tax paid details, error in bank account details, technical problems at the department, incresing number of tax payers, change in mailing address etc.
You should carefully mention your bank account number with IFSC code for timely tax refunds. In case you have not claimed refund while filing the return, you can still file Form 30 claiming tax refund.
Let us look into some basic things about tax refunds, the process and how you can ensure timely receipt of tax refunds:
When are you eligible for tax refunds?
Employers at the beginning of the financial year ask their employees to submit their investment declaration form. This form helps employers to deduct accurate tax from the employee pay. Failure to submit form or declaring wrong investments in the form may lead higher tax deduction results into tax refunds.
Other reasons could be change in the housing loan interest repayment, excess deposit of advance tax on other income, claiming of deduction for donations at the time of filing the tax returns etc.
One major reason of tax refunds is hurry in paying tax on capital gains in advance. Some individuals pay advance but later finds that the tax paid is more than what they are liable to pay, this could be due to indexation, deductions u/s 54/54EC/54F, incorrect calculation of cost of acquisition etc.
How the refund process works?
There is no prescribed time limit for tax refunds, sometimes it may be processed as early as 15 days or sometimes it may take upto couple of years in some cases. Department verifies and process the return once tax return is filed. In case tax is low paid the demand will be raised, on the other hand if tax is overpaid, the same will be granted to the assesse. Ideally, the refund cheque will reach your mailing address or the refund amount will be credited to your bank account through the electronic clearing system (ECS).
Reasons for the delay in tax refunds
Mismatch of Tax Credit (Form 26AS): One of the most common reasons of tax refund delays is mismatching of the taxes paid by you with the Government’s online record (Form 26AS).
Incorrect bank or personal account details: While filing tax return one should ensure that mailing address, bank details, Permanent Account Number (PAN) and all other required details (name, assessment year etc) should be filled accurately.
Treaty claim in the tax return: In case of cross border employees claiming the tax relief, Centralized Processing Centre (CPC) may re-direct the returns to the respective ward to verify the claim and process the tax refunds. The additional procedure results in delay in issuing refunds.
Non submission of ITR-V within the prescribed timelines: ITR-V generated upon filing of the tax return has to be signed, printed and delivered to the CPC Bangalore within the prescribed time limit of 120 days from the date of filing tax return, else tax return is considered not filed.
How to Track Tax Refunds?
An individual can track the refund status as given below:
- Visit tin.tin.nsdl.com/oltas/refundstatuslogin.html
- Enter PAN
- Select Assessment Year
- Click Submit
How to deal with delays in tax refund?
In case you do not receive your tax refund within a reasonable time (normally one year from the date of filing the tax return), you can either visit the tax department for a follow up of the refund or you can write a letter to the concerned tax officer.
However, if no action is taken by the concerned tax officer, the tax payer can move up the hierarchy and write to the jurisdictional Commissioner.
Important points for a faster refund
Verify the tax paid details as per Form 16/ 16A with the Government’s online record (Form 26AS). In case of any discrepancy, contact your employer or the concerned person for the rectification. The Part A of recently notified Form 16 will have the tax paid details as per Form 26AS.
Retain all the supporting documents for the investments, deductions and expenditures. This will help hassle free audit by the tax department and speedy processing of tax refunds
Provide permanent mailing address where refund has opted through cheque.
Submission of ITR-V within the prescribed timelines.
Ensure accurate bank account details are mentioned in the tax return, like bank account number, MICR code, ECS facility etc.
Other details in the tax return, like PAN, name, assessment year etc.
One of the main objectives of introducing e-filing of the tax returns is speedy processing of tax refunds. The Government had recently issued a notification for setting up of Centralized processing cells for computerized processing of TDS statements which may help to reduce the processing time of tax refunds.
The delay in processing tax refund claims, besides causing inconvenience to taxpayers, is also resulting in higher interest outgo for the Government. Hence, the Government is taking various steps to reduce the processing time of tax refunds. Also, the tax payers should ensure that accurate details are mentioned in the tax returns to avoid any delays resulting from their end and also to receive refunds on time.