Explained: How to claim Income Tax refund

Anyone who has paid more tax than his/her tax liability for the financial year is eligible to claim a refund from the Income Tax department. Income tax refunds are pretty common and many individuals claim it every year.

Any amount of excess tax paid during a particular financial year can be claimed as an income tax refund under Section 237 of the Income Tax Act, 1961. The amount of income tax that an individual can claim depends on verification by the tax department after ITR has been filed.

However, individuals need to ensure that they have a pre-validated bank account where they want to receive their income tax refund after filing ITR. The PAN should also be linked with the particular bank account as the income tax department had announced last year that it will only issue e-refunds to such accounts.

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When can you claim it?

It is used by individuals to claim any excess tax paid by him/her during a particular financial year. This usually happens when the amount o tax paid by a taxpayer is more than actual tax liability.

An income tax refund can be claimed in several situations. For instance, if you did not furnish all the investment proofs to your organisation, the amount of taxes deducted by your employer may exceed your actual tax liability.

You can also claim a refund when excess TDS was deducted on your interest income from bank fixed deposits or bond. If the advance tax paid on self-assessment exceeds tax liability during a particular financial year after assessment, an individual can claim a tax refund. It can also be claimed in case of double taxation — this happens when a person is a citizen of one country but derives income from another.

How to claim income tax refund?

The process of claiming income tax refund has become much easier now. Individuals should note that there is no separate procedure to claim an income tax refund. You can claim a tax refund by simply filing the income tax return. Individuals should ensure that their return is electronically verified through Aadhaar number OTP, electronic verification code (EVC) generated through the bank or physically verified by positing the signed ITR-V to the Centralised Processing Centre (CPC) within 120 days of filing the return.

Individuals should also note that the excess tax for which a refund is claimed should reflect in the Form 26AS. Remember that the refund is subject to verification by the Income Tax department. It is credited only if the refund claim is found to be valid.

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It may be noted that early processing of refunds will lead to early refund receipt. Therefore, your tax refund will be processed sooner by the CPC if you get the verification done earlier. In case verification of the return is delayed, the entire process of refund will be delayed.

How to check income tax refund status?

You can easily check your income tax refund status by visiting NSDL website. Enter the details as mentioned (PAN, assessment year, captcha code) and click on submit. You will see the refund status on the next page.

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