What is the Income Tax?
An income tax is a type of charge the Government is authorized to impose on the annual income of businesses and individuals. Taxpayers are bound by the law to file annual tax returns to ascertain their tax obligations. Tax obligation is usually proportionate to the income of an individual i.e., higher the income, higher the income tax is payable, and vice versa.
Income tax is a source of revenue for the Government to fund their various obligations, operate public services, and provide goods to its citizens. However, there are certain investments, as decided by the Government, that is exempt from income taxes.
What is Income Tax Refund?
An income tax refund is the receiving back of the taxes paid by the taxpayer, which are more than his/her actual tax liability. After your file your income tax return, your income tax refund is determined by the income tax authorities for that particular financial year. In most scenarios, the income tax refund is processed by the income tax authorities within three months.
However, some reasons can cause a delay in the processing of your income tax refund:
- Inaccurate bank details
- In case your bank account is outdated/closed.
- Your income tax refund claim is under assessment for validations by your Assessing Officer (AO)
- Delay in filing Income tax returns, past the deadline.
Few cases of Income Tax Refund:
Explained below are a few examples where a taxpayer can claim income tax refund:
- In actuality, your taxable income for the financial year is zero; however, the bank has deducted TDS on your fixed deposits.
- Pending income tax adjustments of the previous financial year are receivable as an income tax refund in the current fiscal year.
- You have filed your income tax returns after self-assessment, but after calculating permitted deductions, your tax obligation is lower, which makes you eligible for an income tax refund.
- If there is a delay in claiming 80C deductions, investments, or expenses that are eligible for a tax deduction, after your employer has already deducted income tax (TDS), you can request an income tax refund.
- If your annual income is taxable in another country and you have paid income tax in India as well, then you can claim an income tax refund.
- You end up paying advance tax over your actual tax liability.
- You need to file an income tax return online.
The process to claim Income Tax Refund
The process to claim an income tax refund is more or less the same as filing income tax returns, though you need to ensure that you have E – verified your ITR within 120 days of submitting your income tax returns. Else, the ITR and refund will not be processed.
What is e-verification in ITR?
E-verification is an Electronic Verification Code (EVC) that is sent to the registered mobile number of the taxpayer at the time of filing the ITR online, to verify the identity of the tax filers. The Electronic Verification Code (EVC) is generated through the E-filing portal of the Income Tax Department.
- Once the Income-tax department’s software picks your Income-tax return, your refund is processed at the earliest. This process usually takes anywhere between 40 to 45 days from the date of E-verification.
- Before you receive your income tax refund, you will receive an intimation regarding the same from the Income-tax department on your registered email ID as well as mobile.
- It is also important to note that it is mandatory to pre-validate your bank account to receive your income tax refund on time.
Until when can Income tax refund be claimed?
- A taxpayer is allowed to claim income tax refunds up to 2 years from the financial year-end for which the income tax refund is due. E.g., If the income tax refund is for the fiscal year-end 31st March 2020, the taxpayer has to claim the refund latest by 31st March 2022.
- In case the taxpayer wants to claim refund pending for more than two years, he/she will need to follow the guidelines of the CBDT Circular No: 9/2015 for requesting a pending income tax refund of up to six assessment years. However, the taxpayer must fulfill certain conditions to make sure the application to excuse the delay in claiming the Income-tax authorities accept a refund.
How to Check the Income Tax Refund Status Online in 2020?
There are two methods for checking your Income tax refund status online for AY 2019 -20:
1. By visiting the TIN-NSDL Website:
- Visit https://tin.tin.nsdl.com/oltas/refundstatuslogin.html, Income Tax Refund status’s online checking portal.
- Enter your PAN details and choose the applicable assessment year and enter the Captcha code.
- Click on the ‘Proceed’ button to know the latest status of your income tax refund claim.
2. By visiting the E-Filing website
Under this category, there are two ways of checking the status of your income tax refund:
- Checking the income tax refund status on e-Filing site by Logging in
- Visit https://www.incometaxindiaefiling.gov.in/home and log in to your account with your User ID and Password.
- On the dashboard, click on the 2nd option i.e., “View Returns/Forms.”
- Select the option “Income Tax Return.”
- This option will generate the list of all income tax returns filed by you.
- Now, click on the Acknowledgement Number.
- This number will generate all the information regarding your Income tax returns, including the status of your income tax refund application.
- It takes up to 10 days for your income tax refund status to be updated after the IT department has processed the refund to your bank account.
- Checking the income tax refund status on e-Filing site without Logging in
- Visit https://www.incometaxindiaefiling.gov.in/home
- Select the “ITR Status” option under “Quick Links” on the left side of the website’s home page.
- Enter the required details; ITR Acknowledgement Number, PAN, and Captcha Code and click on “Submit” to generate your latest income tax refund status.