Handling tax refunds can be daunting, but a clear understanding of the process simplifies it significantly. In this newsletter, we’ll cover essential information about tax refunds, including eligibility criteria, the process of claiming your refund, and how to track its status.
What is a tax refund?
A tax refund is the money returned to taxpayers when they have overpaid their taxes throughout the financial year. This can occur if the total tax deducted or paid is more than what is due based on their income and tax liabilities.
In India, taxpayers make tax payments through TDS (Tax Deducted at Source), advance tax, or self-assessment tax. When the total tax paid or deducted exceeds the tax liability calculated in your Income Tax Return (ITR), the excess amount can be refunded. The refund process ensures that taxpayers do not overpay and receive any excess payment back.
Who is eligible for a tax refund?
Eligibility for a tax refund depends on several factors:
If you have had more tax deducted at source (TDS) or have made advance tax payments that exceed your actual tax liability, you are eligible for a refund. This often applies to salaried employees, freelancers, and individuals with investments generating taxable income.
If you claim deductions under sections such as 80C, 80D, etc., and these deductions reduce your tax liability below the total tax paid, you may be eligible for a refund.
Only those who file their Income Tax Return are eligible to claim a refund. The return must accurately reflect your income, tax deductions, and tax payments to determine if a refund is due.
If you have incurred losses in previous years or during the current year that can be carried forward and set off against the current year’s income, you may be entitled to a refund if these losses reduce your tax liability.
Who is Not Eligible for a Tax Refund?
Certain individuals or situations may not qualify for a tax refund:
If your total income is below the taxable threshold, you may not be eligible for a refund.
Individuals whose salary is below the minimum threshold set by the Government of India may not be eligible for a refund.
If your total tax payments match your tax liability, or if you have not overpaid, you will not be eligible for a refund.
Those who do not file their Income Tax Return, or who file it incorrectly, will not be eligible for a refund. Filing is essential to initiate the refund process.
Claims for deductions that do not comply with tax regulations or are not supported by valid documents may lead to a rejection of the refund claim.
If the bank account details provided in your ITR are incorrect or incomplete, the refund may not be processed, and you will not receive the amount due.
How to Claim Your Tax Refund?
Claiming your tax refund involves the following steps:
Log in to the Income Tax Department’s e-filing portal. Select the appropriate ITR form based on your income sources and eligibility. Fill in all required details accurately, including income, deductions, and tax payments.
Choose your preferred method of verification: Aadhaar OTP, net banking, or by sending a signed ITR-V to the Centralised Processing Centre (CPC). Verification must be completed within 120 days of filing the ITR.
The Income Tax Department will process your return, assess your tax liability, and determine the refund amount. Processing times can vary; typically, it takes a few weeks to a few months.
Once processed, the refund will be credited directly to your bank account. Ensure that your bank account details are accurate and up-to-date in your ITR.
If your bank account details change after filing your ITR, update them promptly on the e-filing portal to ensure that your refund is credited correctly.
How to Check Your ITR Refund Status for FY 2024-2025?
To track your refund status, follow these steps:
Go to the official Income Tax Department e-filing website.
Navigate to the ‘Refund Status’ section, usually found under the ‘Services’ tab or a similar heading.
Provide details such as your PAN (Permanent Account Number) and the assessment year you filed the return.
The portal will display the status of your refund, including whether it has been processed, approved, or if further action is required.
Monitor any updates or communications from the Income Tax Department regarding your refund.
Getting a tax refund doesn’t have to be confusing. By following the outlined steps and staying informed about your eligibility, you can efficiently navigate the process and ensure you receive any excess tax payments promptly. For further assistance, always feel free to consult with a tax professional or visit the Income Tax Department’s official website. JJ Tax
If you still haven’t filed your ITR, you still have the chance.
Contact JJ Tax for belated return, revised return or reply to IT notice .