Categories: Income tax Return

How to Claim a Full Income Tax Refund

How to Claim a Full Income Tax Refund

An income tax refund occurs when the tax paid by a taxpayer exceeds their actual tax liability for a financial year. This typically happens due to advance tax payments or Tax Deducted at Source (TDS) deductions that exceed the final assessed tax liability. Following are the Eligibility Criteria for Income Tax Refund. To be eligible for a refund, taxpayers must file their returns by July 31st of the assessment year. Filling out the income tax refund form and sending in the required paperwork, such as utility papers and pre-filled ITR, are prerequisites for applying for an IT refund. Taxpayers are eligible for an income tax refund if:

  • Your total advance tax payments exceed 100% of your actual tax liabilities.
  • Taxpayer TDS payments exceed your final tax liability after regular assessment.
  • You have made last-moment tax-saving investments that reduce your taxable income.
  • Taxpayer have paid tax on income in a foreign country that has a Double Taxation Avoidance Agreement (DTAA) with India.
  • You have paid excess tax due to errors in regular assessment.

Due Date to Claim Income Tax Refund

  • Claim your refund within 12 months after the end of the relevant assessment year.
  • You can claim a refund for up to six successive assessment years. Claims older than this period are not accepted.
  • Delayed claims may be accepted if verification is required.
  • The total claim amount for one assessment year should not exceed Rs 50 lakh.

IMPORTANT REMINDER FOR ITRS FOR FY 2023-2024:

Key Changes and Requirements for Tax Refunds: By following these steps, you can minimize the chances of refund failures and ensure a smooth refund process.

  1. Previous Requirements (Up to AY 2023-2024):
  • Taxpayers needed to select a specific bank account in their Income Tax Return (ITR) for receiving tax refunds.
  • The selected bank account had to be pre-validated on the Income Tax Portal to receive the refund.
  1. New Requirements (From AY 2024-25):
    • Taxpayers can no longer select a specific bank account for the credit of their refund in the ITR.
    • Refunds will be credited automatically to one of the taxpayer’s pre-validated bank accounts.
    • Only pre-validated bank accounts will be eligible to receive tax refunds.
    • The bank account number must be linked with the taxpayer’s Permanent Account Number (PAN).
  1. Eligible Account Types for Refund Credit: Only following account are eligible accounts for income tax refund credit i.e Savings Accounts, Current Accounts, Cash Credit Accounts, Overdraft Accounts, Non-Resident Ordinary (NRO) Accounts
  2. Ineligible Accounts: If the bank account mentioned in the ITR has been closed, the refund cannot be processed to that account. Only following account are eligible accounts for income tax refund credit i.e Closed bank accounts, Invalid accounts, Accounts under litigation, Blocked status accounts.

Action Items or point to be taken care for Taxpayers in relation to income tax refund:

Apart from the general criteria for refund eligibility and the necessary procedures, a refund from the Income Tax Department may fail to get credited to your bank account due to the following reasons:

  • Taxpayers Ensure that the bank accounts in which you wish to receive your tax refunds are pre-validated & Confirm that your bank account is linked with your PAN and The name in the bank account must match the name on your PAN card. Any discrepancies can cause the refund to fail.
  • Moreover that Taxpayers Ensure that the accounts are not closed, invalid, under litigation, or blocked to prevent any issues in receiving refunds.
  • Ensure that the IFSC code provided is correct. An invalid or incorrect IFSC code will prevent the transfer of the refund amount.
  • It is compulsory to pre-validate your bank account on the Income Tax e-filing portal. Failure to do so will prevent the refund from being credited.
  • Make sure to complete these checks before uploading any ITR forms to ensure a smooth refund process.
  • Special Cases of income tax Refund: In cases of insolvency, death, liquidation, incapacity, or other causes, a legal representative, guardian, receiver, or trustee can file for an income tax refund on behalf of the taxpayer under Section 238 of the Income Tax Act, 1961.
  • Interest on Income Tax Refund: If the refund amount is equal to or more than 10% of the total tax paid, the Income Tax Department pays interest under Section 244A of the Income Tax Act. The interest rate is 0.5% per month on the refund amount.

How to Check Income Tax Refund Status?

Following two way to check the Income Tax Refund Status

  • Through E-Filing Website:
    1. Visit incometax.gov.in
    2. Log in using your PAN and Aadhaar numbers.
    3. Navigate to e-File > Income Tax Returns > View Filed Returns to check the status of your ITR and refund.
  • Through TIN NSDL Website:
    1. Visit TIN NSDL refund status page.
    2. Enter your PAN and select the assessment year.
    3. The portal will display one of the following statuses:
      • Not Determined: The refund is yet to be accepted by the assessing officer.
      • Refund Paid or Credited to Bank: The refund has been processed and paid.
      • ITR Proceeds Determined and Sent to Refund Banker: The refund amount is yet to be transferred (cheque drawn)

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