How to claim Tax Refunds

Since filing for tax returns has been made mandatory, you can claim the refund while filing your return itself. That is why you must mention your bank account number and the bank MICR code while filing the return.

But if you have not claimed refund while filing the return, you can still file an application for claiming tax refund using Form 30.

Tax refund could be due to following reasons:-

·        Not submitted proof of tax-saving investments to employer: Most companies require employees to declare at the beginning of the financial year their proposed investments for tax exemptions/deductions. House rent and leave travel allowances are the common exemptions that can be claimed. Most companies ask employees to submit the proof by before March so that they can account for it in the Form 16.

Some employees fail to make the declaration, while some may give the details but fail to provide the relevant documentary proof within the time frame prescribed by the employer. In either case, employees can claim tax exemptions/deductions only while filing tax returns.

·        Interest paid on home loan not accounted for: The deduction on interest on the housing loan, based on the provisional certificate obtained from the housing finance company/bank during the financial year, is reflected in Form 16. The repayment of interest is eligible for tax-exemption under Section 24.

It may happen that it does not get accounted in Form 16. If this is the case, you can claim refund for the interest repayment of your home loan while filing the return.

·        Non submission of 15G/15H forms: In the case of individuals/senior citizens, banks deduct income-tax at source if they fail to furnish declaration in Form 15G/15H for non-deduction of tax on their interest income. Further, if PAN is not provided, the deduction rate goes up to 20% from 10%.

·        Capital gains tax paid in advance: Some individuals pay advance tax on the capital gains they expect during the year. This can be adjusted against any capital loss they may incur later in the year. The amount of capital gain could also be lower due to indexation, deductions u/s 54/54EC/54F, incorrect cost calculation etc.

ELIGIBILITY FOR REFUND

Taxpayers should first calculate their final tax liability in accordance with the tax slabs applicable to them. If the total tax liability is less than the taxes paid or deducted during the year, they would be eligible for a tax refund.

CALCULATING REFUND

For calculating refund, you have to calculate taxes on income after applying the applicable income tax rates. Once you arrive at the total tax payable, deduct all the tax deducted at source and advance taxes and self assessment tax paid (if any). The balance (if negative) is the refund amount.

CLAIMING OF REFUNDS

E-filing results in quicker refunds. Taxpayers should mention the correct bank account number if they want the refund cheque to be deposited in their account. If a taxpayer wants the refund directly credited to the bank account, then he/she should provide the MICR of the bank's branch as well. If you opt to receive the refund by way of cheque, ensure that you mention your permanent address in the tax return form. Else, in case you change the address before receiving the refund, the refund cheque would be returned undelivered to the I-T department. If the cheque is invalid/expired by the time it reaches you, intimate the jurisdictional office and send the cheque back to the refund banker for re-issue.

PROCESSING TIME FOR REFUND

In cases of e-filing, the refund is received within two to seven months. For offline returns, it often takes anywhere between one and two years. In case you haven't received your tax refund, file an application with the grievance cell.

This Article has been Shared by Student of ICAI Palak Aggarwal. She can be reached at aggarwal.palak2809@gmail.com

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