A tax refund is a refund on taxes when the tax liability or the amount of tax to be paid is less than the amount of taxes paid by the individual. However, you can also claim a tax refund in case the taxes were deducted because you did not declare your tax savings investments details to your employer or the bank deducted tax at source on Term Deposits where the interest income on a particular financial year exceeds Rs. 10,000.00 but you don't have any other taxable income. For salaried individuals, it is possible that that the company deducted excess tax because you did not declare any of your tax savings investments to the employer. In such a case, a tax refund may be helpful. Towards the end of the financial year, most of us are dogged with the thoughts about filing investment declaration, filing tax returns and basically save as much money as possible from being deducted as tax. Once the formalities are completed, we think little about any tax refunds. Tax refunds are something that a few of us might get and a few of us might not. To be prepared it is prudent to know some basic information about tax refunds.
There is an incentive for taxpayers who file their income-tax returns electronically — they will get their refunds normaly within 1-2 months time. To speed up refunds and encourage electronic filing of tax returns, the Central Board of Direct Taxes has promised expeditious refunds. The wait for refunds in the case of physical tax returns may ranges between 5-10 months. CBDT want tax-payers to file electronically as that helps in faster processing of refunds. The verification of the paper tax returns filed is a tedious process that also delays tax refunds. This has become a bigger issue with the rising refunds. E-filing ensures that tax payers' information on income, taxes and refunds are uploaded in the tax system instantly and tax computations are processed on a real-time basis. Income-tax authorities send data to State Bank of India/other banks which in turn issues refund orders directly to tax-payers under the refund banker scheme. As notified by the Income Tax authorities, the small salaried tax-payers having annual income of Rs 5 lakh who will not be required to file tax returns if they do not have refund claims. Such tax-payers will not be required to file return unless they have tax refund.
If you do not want to wait for a long time to get your tax refund, you need to make sure that you do tax planning as early as possible. You need to assess your tax liability and if need be, take additional help from a tax expert. You also need to invest or save money according to the assessment of your tax liability. Finally, if you are a salaried individual, you need to declare your tax savings investments and other incomes details to your employer so that they can deduct the correct amount of tax from your salary.
To see whether you are eligible for a tax refund, you need to file your tax returns or check the Form-16 that you receive from your employer if you are a salaried individual.
The tax return will show the amount of refund (if any). In case if the tax return already shows that you are getting a tax refund you need not apply for it. The tax return cheque/refund order directly comes to the address mentioned on the Return of Income document filed with the Income Tax department. Tax refund can also be credited directly to your bank account which needs to be mentioned on the tax return. In a situation where you think that you forgot or did not have the proper documents to show the investments made, a Revised Return of Income needs to be submitted. The Income tax department has recently started an initiative where you can check your tax return status online. Tax refund needs to be claimed with one year of the last day of assessment year.
If you do not receive your tax refund within a reasonable time (may vary from case to case) which normally is within a maximum of one year from the date of filing the tax return, you can either visit the tax department's office for the follow up of the refund or you can write a letter (along with the copy of acknowledgement of the tax return) to the concerned Income Tax Assessing Officer. If it is still not redressed then you may write a letter to the jurisdictional Chief Commissioner of the Income Tax with a copy to the Grievance Cell and the concerned Income Tax Officer. This letter may be accompanied by the copies of previous letter/s written to the Income Tax Assessing Officer and a copy of the tax return filed. In case you have tax refund, it is recommended filing your tax returns electronically (E-filing) to avoid the delay in getting the refund orders.
This article is for general information of the readers. Please contact your tax consultant or Chartered Accountant for more information and guidence
With Regards
Prakash Nair
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