Personal finance management is largely dependent on income tax refunds to millions of taxpayers globally. Income tax refunds can be simply defined as overpayments by individuals that are repaid by the government after they have filed their tax returns. In order to effectively manage your resources, it is important to stay aware of the refund process of your hard-earned money whenever you need it in life. The process of getting these refunds starts from filing a tax return up to receiving the money in your account. For you to navigate through this process successfully, it would be helpful to learn how refunds are calculated, how one can check their status, and what deadlines should be met.
How Do You Calculate Income Tax Refund With An Example?
If you paid more taxes than you were required to pay, you may be able to get the overpaid amount as a response to your income tax return.
Income Tax Refund = Taxes paid – Total tax liability
If taxes paid (either in Advance Tax, TDS, TCS, or self-assessment tax) are higher than the actual amount of tax due, the excess can be claimed for a refund. The income tax department would recalculate them and verify the refund claim before initiating the refund.
Let’s consider an example to illustrate the income tax refund process.
Mr Sharma is employed at Deloitte with a package of INR 11 LPA. He paid an advance tax of INR 1,20,000 for the year. By the end of the year, after claiming a deduction of INR 1,50,000, his taxable amount under the old regime stood at INR 96,200. To get a refund for the excess tax paid (1,20,000 – 96,200 = 23,800), Mr Sharma has to file a tax return. After the approval of his return, he can expect to get his refund within a period not exceeding 30-60 days maximum.
Steps To Check Your ITR Refund Status Through e-filing Website and TIN NSDL Website
E-filing Website:
It would be best if you filed and tracked your ITR and income tax refund status at eportal.incometax.gov.in. In case you do not possess an account, create one by using your PAN and Aadhaar numbers. After that, log in to this portal to check for your latest ITR status.
If the last ITR is not available on the dashboard, go to e-File on the menu and select Income Tax Returns, where the ‘View Filed Returns’ option is available. This will display all historical ITRs that you have filed, along with their respective statuses. If you have made offline returns, you need to access the ‘View Filed Forms’ section for navigation. You can also check the status of the tax refundment here if your last ITR was processed and the tax refund issued.
TIN NSDL Website:
The TIN NSDL website gives you the option to check the status of your income tax refunds. This is done by visiting https://tin.tin.nsdl.com/oltas/refund-status-pan.html, where you need to type your PAN and select the tax refund’s assessment year you want to check.
Depending on the situation, you will see one of the following status messages in the portal:
- It is yet to be determined if the assessing officer has accepted the refund or not.
- Refund Paid or Credited to the Bank when the processing and payment of the refund have taken place
- ITR Proceeds determined and sent to Refund Banker if the amount is still not transferred (cheque drawn).
Due date to claim income tax refund
Taxpayers can apply for an income tax refund within 12 months after the end of a relevant assessment year. However, other conditions apply to refund claims.
- Within a period of six consecutive assessment years, you are eligible for a tax refund on the amount of income tax that has already been paid. The claims for tax refunds after this time limit will not be accepted by CBDT.
- No interest is paid on tax refunds by CBDT.
- In case it needs verification, officers may accept delayed claims for tax refunds.
- The total claim amount for one assessment year should not be more than Rs 50 lakh.
Time Duration For a Tax Refund
The length of time taken to receive your tax refund is entirely dependent on the processes that are internal within the Income Tax Department. Usually, it can take approximately between 7 and 120 days with an average time of about 90 days after you have e-verified your return. A new system for processing refunds was implemented by the Income Tax Department in order to make it possible to have faster refund processing times believed to only span a few days as opposed to months. Consequently, for returns filed during AY 2023-24, the average ITR processing period has consequently decreased to 10 days compared with 82 days for those filed in AY 2019-20 and 16 days in AY 2022-23.
Mode of Receiving The Refund
The Income Tax Department sends the refund amount through e-mode or ‘Refund Cheque.’ To get a refund, you must enter a correct account number along with an IFSC code containing complete address details, including the PIN code while filing your return for assessment. The refund cheques are sent to the given address in the ITR speedily through the post.
Final Words
Income tax refunds represent a key aspect of managing taxes and provide much-needed financial relief as long as they are processed quickly. Knowledge of refund calculation steps and tracking procedures helps taxpayers understand everything throughout the process. This will minimise instances of delayed
refunds as people file their returns timely and correctly. To ensure that taxpayers easily track their refunds without having to follow up on any complaints, the income tax department has put in place different avenues for checking refund status. Constant updates about taxation are crucial for effective and smooth planning concerning personal finances.
