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Tax Refund

Reviewed by Komal | Updated on Sep 30, 2020

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Introduction

Income tax refund arises when you have paid taxes higher than your actual tax liability. The tax paid could be advance tax, self-assessment tax, and TDS. You can claim such tax refund by filing your income tax return and verifying it within 120 days of filing it. Make sure that your income tax return is verified electronically through Aadhaar OTP, EVC generated through bank account, or through netbanking. You can also verify it physically by sending a signed acknowledgement to CPC, Bangalore.

What is Tax Refund?

There is no doubt that the verification has to be done within 120 days from filing your ITR. However, the sooner you verify, the sooner the department will process your refund. Once your return is processed, you will receive your income tax refund.

You can check your income tax refund status online by following these steps: 1. Access the TIN NSDL refund page. 2. Enter your PAN, assessment year and captcha code. Then click on submit. 3. Your refund status will be displayed on the following screen.

Who is eligible to pay?

Any person who has paid taxes in excess to his actual tax liability in a financial year will be eligible for tax refund.

Sometimes, it might happen that your refund amount received will be higher than the refund amount claimed by you in your income tax return. This difference is nothing but an interest on income tax refund. It is payable by the income tax department in case the refund amount is greater than 10% of the tax paid.

Section 244A of the Income Tax Act, 1961 deals with the interest on the tax refund. It states that an interest at the rate of 0.5% per month or part of the month on the refund amount. Such interest will be computed from 1st of April of the assessment year until the date of processing of refund, provided that the refund is made due to excess advance tax or TDS paid.

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