The Income tax refund is a refund on taxes when the tax liability is less than the taxes paid. Assessee can frequently get a tax refund on their income tax if the tax they owe is lesser than the sum of the withholding taxes and estimated taxes that they paid, plus the refundable tax credits that they claim. The Income Tax refunds are money(cash) given back to the assessee at the end of the financial year.
What is Income Tax Refund? As per the Income tax laws, Tax refund arises in cases where the amount of tax paid by an individual (or paid on his or her behalf) is greater than the amount on which he or she is properly chargeable. Income Tax Refund is noted as per the [Sections 237] to [Section 245] of the Income Tax Act, 1961.
Who is eligible for Income Tax refund?
Many times it may happen that the assessee has paid excess tax as against the tax required to be paid by him. In such a case the taxpayer is granted an Income Tax refund of the excess tax paid by him. In this part, he can gain knowledge about various provisions relating to the claim for refund of excess tax paid by the taxpayer. There are some cases where assessee will qualify for a tax refund. Let us take a look at eligibility criteria for Income Tax Refund.
- When the tax paid by the assessee by self-assessment is more than the tax payable (regular assessment base).
- If the taxpayer has investments which offer tax benefits and deductions that you have not declared.
- If the tax deducted at source (TDS) from salary, interest on securities or debentures, dividends, etc. fo the taxpayer is more than the tax payable by regular assessment.
- If you find, after considering the taxes you’ve paid and the deductions you are allowed, that the tax paid amount is in the negative.
- An Income is taxed in a foreign country and India as well.
How to claim Income Tax Refund?
If the Assessee has to make a request for the refund, then the claim should be made in Form 30. In the ordinary cases, the refund is to be claimed in the return of income itself and no individual form is to be submitted to request the tax refund. The Income tax refund claim is to be made within one year from the last day of the assessment yea[A.Y]. The Circular 9/2015 [F.NO.312/22/2015-OT], dated 09-06-2015 is furnished by the CBDT, for dealing the matters relating to applications for condonation of delay in filing returns claiming the refund. This Circular is issued in supplement of all earlier Instructions or Circulars or Guidelines published by the CBDT.
The Circular containing complete guidelines on the conditions for condonation and the procedure to be followed in deciding such matters. The details are listed below.
- The Principal Chief Commissioners of Income-tax shall be vested with the powers of acceptance or rejection of such claims if the total amount of such claims exceeds Rs.10 lakhs but is not greater than Rs. 50 lakhs for any one assessment year. The CBDT shall consider the claims for the amount exceeding Rs.50 lakhs.
- No condonation application for claim of refund or loss shall be entertained beyond six years from the end of the assessment year for which such a claim is made. The limit of Six years shall apply to all authorities having powers to condone the delay as per the
Monetary limits, including the CBDT.
Income Tax Refund on Appeal
Under [Section 240], in a case where the refund becomes due as a result of any order passed in appeal, the Assessing Officer(A.O) shall refund the amount to the taxpayer without making any claim in that behalf.
- However the Assessment is set aside or canceled, and an order of fresh assessment is directed to be made, the refund( if any) shall become due only on the making of such new assessment.
- The Assessment is canceled, the refund shall become due only on the amount of the tax paid over the tax chargeable on the total income returned by the taxpayer.
Interest on Delay in Income Tax Refund
In Many cases, the assessee does not get his Income tax refund in due time. In such a cases the taxpayer is granted with interest on delayed refund. As per the [Section 244A] Interest on Delay in Income Tax Refund provision applies to the Assessee as follows.
- The refund arising to the assessee is out of any TDS tax deducted or collected at source or tax paid by way of advance tax; then the taxpayer shall be entitled to interest calculated at the rate of 0.5% for every month or part of a month. Interest in such a case shall be allowed for a period commencing from the 1st day of April of the assessment year to the date on which the refund is granted.
- As per the [Section 143(1)], No interest shall be payable if the amount of refund is less than 10% of the tax as determined.
- In a case the refund is due to reasons other than above, the interest shall be calculated at the rate of 0.5% for every month. The Interest, in that case, shall be allowed for a period starting from the date of payment of the tax or penalty to the date on which the refund is granted.
Setting-Off Income Tax Refunds
At times, it may happen that, the refund may be due to the assessee for some assessment year, and tax demand remaining payable by the taxpayer. In that case, [Section 245] empowers the tax authorities to set-off the refund due to the taxpayer against the amount due from him. Under [Section 245], where a return is found to be due to any individual, the tax authorities authorised instead of payment of the refund to the taxpayer. The set off amount to be reimbursed to the person whom the Income tax refund is due. But, an action can be done only after giving an intimation in writing to such person of the action proposed to be taken.
Income Tax Refund Status
Many times it may happen that the taxpayer has paid excess tax as against the tax required to be paid by him. In such a case the taxpayer is granted an Income Tax refund of the excess tax paid by him. In this part, he can gain knowledge about various provisions relating to the claim for refund of excess tax paid by the taxpayer. There are some cases where assessee will qualify for a tax refund. Let us take a look at eligibility criteria for Income Tax Refund.
Must Read: Income Tax Refund status