Claim Income Tax Refund: A Step by Step Guide

Posted on: 2017-07-28 02:31:06

One of the first things that you need to do in order to claim your tax returns is file your income tax returns (ITR) for the year. Normally, the last date for filing tax returns in a year is July 31 and here you file the tax returns for the previous year. For an example, in this financial year (FY) 2018-19 you will be filing the tax returns in 2019-20, which will be regarded as the assessment year (AY).

A financial year is normally taken as April 1 of one year to March 31 of the next year and the assessment year is the just next year of financial year. For example, AY 2019-20 is the assessment year for FY 2018-19.

It is always better to avoid filing at the last time since there can always be mistakes with such an approach. Always file your returns several days before your deadline so that you do not have to face any undue issues.

All you need to know about income tax refund

The tax on your income over income tax slab needs to pay to the income tax department; after being exempted from all benefits and it is deducted from your annual income. So tax deducted at source (TDS) is a way to collect income tax from the source of your income. It is applicable to various source of income like salary, interest on bank FDs, professional fees/ technical fees, rent of land & building and more.

However, TDS is not the final tax amount that you need to pay to the income tax department; your actual tax liability may be higher or lower after tax calculation. So therefore, if the total TDS deducted during a financial year is greater than the actual tax obligation, then you can make a request for refund of excess TDS that deducted over and above your tax liability.

For an instance, if your total TDS is deducted from a financial year was Rs. 40,000, but at the time of filing the income tax return your actual tax liability is ascertained to be Rs. 15,000 only, then you can claim to receive the income tax (TDS) refund of Rs. 25,000.

Keeping all the necessary papers close by

Before you start the process of filing reports it is important that you have your important papers with you. This would items such as the following:

  • salary statements
  • bank statements
  • business income statements
  • Form 16 from your employers
  • Form 16 from your banks where you have made investments
  • certificates of interest that you have paid
  • proofs of investment and related documents
  • insurance documents that may be relevant
  • 26AS tax credit extract

The business income statements are however applicable only if you have a business as such.

Filing the income tax

The next step is filing the ITR. You can do this by filing either ITR-1 or ITR-4 form. The form contains a number of fields that are important for this purpose. Some of them may be mentioned as below:

  • name
  • address
  • your complete income
  • the income that is liable to be taxed
  • taxes deducted at source (TDS) if any
  • total dues
  • refund due

This form would contain all your financial data for an assessment year. You can fill this form by yourself or take the help of a tax lawyer or chartered accountant if you wish to. The form basically explains itself and this is why you can easily fill it.

How to claim TDS refund

To claim the TDS refund you need to file income tax return (ITR) in the relevant assessment year (AY). The last date of filing ITR is normally 31st July of relevant assessment year.

At the time of filing ITR what information you have provided, the refund amount would be displayed on the screen automatically under the “Refund” row option. Once the I-T Department processes your ITR, verifies its genuineness and accepts it, then you’ll be intimated by them.

Intimation under Section 143 (1) is given to the taxpayer which may say, ‘tax calculation matched with I-T Department’, ‘tax calculation not matches with I-T Department’ or ‘calculation matches with I-T Department and refund claim accepted’.

If you filed your ITR online and have registered mobile number with I-T Department, then you may get intimation through SMS about the processing of ITR.

You will be asked to provide details of the bank account in which you would like to get the refund if you are filing it in online. The refund amount will be credited to your account once the assessment cycle is over for the I-T Department. And for offline refunds a cheque will be issued in the taxpayer’s name.

Identifying the amount to be refunded to you

Once you have submitted the form, you will be able to see the refund in the refund column. This would happen only in case you have paid more taxes than you are supposed to. If you wish to identify this sum you would need to click on the button named validate, which is there on the sheet named taxes paid and verification. Over there, you would need to note the refund amount and also keep a copy of the ITR form thus generated.

You can check the total TDS deducted amount during the financial year by viewing the "Form 26AS". Form 26AS consists of all TDS deducted by the deductor such as bank accounts, employer, tenant etc. You can access the Form 26AS by logging into e-filing portal of Income Tax Department and view it online and can download the same in PDF format.

Sending the form to the income tax office

If a figure is actually shown in the refunds column then it means that you have actually paid more taxes than your actual liability.

In order to claim the refund, you would need to take a print out of that form and then sign at the place where you are supposed to. The form also has the address of the income tax office – it is there where you would have to send the form. The form can be sent through ordinary post or speed post. After this you need to enclose the form, put it in an envelope and then send it to the specified address.

Interest on TDS refund

If the taxpayer files the ITR with a claim for refund of TDS before July 31st of the relevant assessment year, then the taxpayer is entitled to receive the interest on refund amount for the period starting from 1st April of relevant AY to the date on which refund is granted.

If the return is filed after 31st July of the relevant assessment year, then the interest is calculated from date of filing ITR to the date on which refund is granted.

Currently interest rate at 6% per annum is given on the refund amount. Interest received on the refund is taxable and it is added in the gross income of the taxpayer for that financial year in which interest is received.

How long the refund takes

This is the final stage. After Income Tax Department gets the signed on it, you would be informed by way of SMS (short message service) or email. It would definitely verify the figure in case it finds something wrong with it.

However, as soon as they are okay with the data that you have furnished the application would be processed and the extra taxes that you have paid would be refunded to you. Throughout the entire process you would keep receiving communication from the Income Tax Department by way of SMS or e-mail. 

It depends upon whether the TDS is given on online or through cheque, it normally takes two weeks to three months of time from date of verification of ITR to get the TDS refund. For those who have filed it after first deadline, it may take longer for them.


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