FAQs on Income-tax refund

What is Income-tax refund?

Ans. Income-tax refund, in simple words, is the amount which the Government pays back to the taxpayer who has paid excess Income-tax. From salaried taxpayer’s point of view, Income-tax refund mostly arises when the employer has deducted excess tax from salary. Also, if taxpayer has contributed to any charitable trust or if taxpayer is claiming additional tax saving benefit in his/her Income-tax return, which is not included in his Form 16, then he is entitled to get refund after considering the same.

How can I get my Income-tax refund?

Ans. In order to get Income-tax refund, a taxpayer is required to file his Income-tax return. The amount of refund receivable is to be shown in Income-tax return. After filing of return, department will process it and after its satisfaction refund is paid to taxpayer. Also, taxpayer needs to provide his correct bank account details so that refund will be credited in that account.

Who can claim a refund?

Ans. Only a taxpayer can claim a refund but if the taxpayer is not in a position to claim the same due to death, incapacity or some other reason, then his legal representative/ trustee/ guardian/ legal heir is entitled to claim the refund on behalf of taxpayer.

What should I do to claim refund in case returns of previous year’s not been filed?

Ans. Taxpayer can claim refund by filing his Income-tax return. In case he has failed to file his return due to a genuine reason. Further period for filing a return has also been expired, then he can make an application to Income-tax Officer U/s. 119(2)(b) of the Income-tax Act requesting him to settle his claim of refund.

However, Income-tax Officer may accept or reject an application as per his satisfaction of genuine reason provided by taxpayer.

Will interest be receivable on refund?

Ans. If the amount of refund exceeds 10 per cent of the total tax payable for that particular year then you are entitled to receive simple interest on your tax refund.

Interest is paid @ 0.5 per cent per month on the amount of refund. The interest is calculated from the 1st day of next financial year till the date of payment of refund.

Let’s take an example:

For financial year 2013-2014, return was filed on 31st July 2014. Taxpayer’s total tax liability was Rs 50,000. Tax deducted at source by the employer was Rs 65,000.

Therefore, taxpayer has paid more tax than his tax liability and hence he is eligible for refund of Rs 15,000. Since the refund amount is more than 10 per cent of tax liability {15,000 > (50,000 X 10 per cent)}, taxpayer would be eligible to receive interest on tax refund. Let’s assume that the refund is issued in December 2015. Then the total interest on refund would be (15,000 * 0.05 X 9 months) = Rs 675. Therefore, the total amount of refund including interest would be Rs 15,675.

Is the refund taxable?

Ans. The amount of refund is not taxable.

However, interest received on tax refund is taxable. The rate of tax would be as per your applicable slab rate. Taxpayer is required to include interest on refund under income from other sources.

How to check refund status?

Ans. Taxpayer is required to login in his myITreturn account. On the dashboard, click on “My Services”. Choose the relevant Assessment year for refund status. Then he is required to click on ”Track your Refund  Status”.

Taxpayer may also login to Income-tax department’s website. Then click on “My Account” tab. Third option is of Refund/Demand status. After clicking on it he can check his refund status.

What to do if refund cheque is returned or refund is not paid due to incorrect details provided?

Ans. Login to Income-tax department’s website. Click on “My Account” tab. Then click on “Refund Reissue Request”. Select the relevant Assessment Year. Taxpayer will be asked CPC communication reference number and Refund Sequence number. [Communication reference number is mentioned on intimation U/s. 143(1) or a rectification order U/s. 154]. It will be in CPC/1234/P2/xxxxxxxxxx” format where “xxxxxxxxxx” represents a unique ten digit number. Further Refund Sequence number will also be a unique ten digit number on  the first page of the intimation or order. Once taxpayer enter both the numbers, he is required to click on “Validate” button.

He is required to provide correct account bank details so that refund may be deposited in his account.

How to check whether refund re-issue request is sent or not?

Ans. After logging in Income-tax department’s website, there is an option “My Request List”, click on it, and select the option “Refund Reissue Request” from the drop-down. Thereafter taxpayer will get the status of his refund re-issue request.

Can refund be credited directly to my account?

Ans. Yes. It will be deposited in taxpayer’s Primary account mentioned by him at the time of preparing Income-tax return.

Can the refund be set off against some other payment?

Ans. Yes, if taxpayer is having some amount outstanding for any Assessment Year, then the Assessing officer can adjust or set-off the refund with such tax demand after giving a due intimation to taxpayer. However such set off cannot be done by the assessee on his own.

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FAQs on Income-tax refund
Income tax refund is payable to the assessee when, tax payable is less than tax already paid or tax already deducted.
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